Anheuser-Busch InBev to sell three can plants, one lid plant to Ball Corp.
Anheuser-Busch InBev’s Metal Container Corp. will sell four metal beverage can and lid manufacturing plants to Ball Corp., a big supplier of metal and plastic packaging for the food and beverage industries. Price tag: $577 million in cash.
Ball will continue to supply Anheuser-Busch InBev with metal beverage cans and lids from the plants. And here is a spot of unexpected good news for employees: As part of the acquisition agreement, Ball has committed to offer employment to each active employee of the plants.
The can plants are located in Fort Atkinson, Wisc., Columbus, Ohio, and Rome, Ga. The divested lid plant is in Gainesville, Fl. The plants are fairly focused on soft drinks.
These are apparently not slouch assets. In the first full year of operation, Ball expects the plants to generate $680 million in revenue and $94 million of earnings (before interest, taxes and depreciation.) The plants produce about 10 billion aluminum cans and 10 billion easy-open can ends per year. The facilities employ about 635 people.
Metal Container Corp.’s remaining holdings - seven metal beverage can and lid manufacturing plants - will be more focused on beer-can production. Anheuser-Busch InBev said there are no plans or activities underway to sell the remaining plants.
The sale of the plants represents another step in the brewers debt-repayment program, chief executive Carlos Brito said in a statement. The deal also allows Anheuser-Busch InBev to keep the facilities that are “most relevant” to its beer business, Brito said.
“We have great respect for Ball Corporation and are pleased to have found a strategic buyer that shares our high opinion of these facilities and their employees,” Brito said.
The transaction is expected to wrap up at the end of the year or early in the first quarter of 2010.
So, the chatter about an impending sale that Lager Heads reported earlier this week turned out to be more or less accurate. Hooray for rumor and innuendo! Thanks to readers who contacted us with the scoop.
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Jeremiah McWilliams is a native Virginian who came to the Post-Dispatch in early 2007 to cover beer and other consumer products. He previously covered manufacturing for the Virginian-Pilot newspaper in Norfolk, Va. He is a graduate of Washington and Lee University. 
SoCal,
You’re probably right on the other plants; you can bet that Ball will be right in the thick of things if they do go up for sale.
KD,
I’m in the Chicago area!
Regarding buying plants that have to deal with Brito, (I presume he’s an InBev big wig?), the answer is simple; the major can manufacturing companies, (i.e. Ball, Crowne and Rexam), already do business with AB/InBev. As I understand it however, August Busch III only had 45% of his production made in house anyway, the rest was outsourced to the rest of the packaging industry, so it’s not like MCC had a stranglehold on all of Busch’s business.
I can’t speak for InBev, I agree they probably overpaid. One thing I can almost guarantee however is companies like Ball and Rexam have done their research into these facilities and wouldn’t buy them unless if failure was as easily achieved as laymen like us make it sound.
On the other hand it makes sense for Ball to purchase these plants as they’re already a major manufacturer for Pepsi (which was MCC’s biggest customer, even bigger than AB).
To show how far that 577 million will go. Let’s say that Inbev is paying a 2% interest rate (most of the what the bank made on the deal was up from fees so the rate probably isn’t much higher than 2% if that, it’s probably less) on that 45 billion ( I realize they have paid a small portion back)that 577 million doesn’t even pay the interest for one year. Money down a rate whole.
should have read “rat” hole.
KD - A-B produces 180 Energy Drinks. They also distribute Pepsi and Monster energy drinks. Some of the cans from the plants sold probably filled those purposes.
After reading some of the comments let me help with understanding why the sale of the MCC plants is a good deal for both sides.
As a industry there has been over capacity for some years now. As a result of this many companies have shut down production lines and indeed entire plants. This is especially true on the lid side of the business. Ball and other companies have done so. The only company to not do this is MCC. Now that Ball has purchased the 4 MCC plants you can bet there will be further closures of lesser efficient / profitable lines. That will only strenghten MCC’s position in my opinion.
It is true that can / lid suppliers have contracts but at some point that business will be up for grabs. When that time comes you can bet that MCC will get the lions share of the AB/InBev business. Potential MCC plant expansions will keep prices low and nobody will raise prices. So In/Bev gets a short term gain and no harm in the long run. Ball gets plants that make them better and more competitive and less likely to close plants down the road. Sorry Rexam but I see closures in your future. InBev feels you’ve been gouging them on prices for a while now so beware when it’s contract time. Now that MCC is in the fold you’ll need to make major concessions or lose business.
AB/InBev stock price says it all. In 18 months it will double again. Maybe sooner so who cares about dividends when the share price is going nuckin futs. Buy now…enjoy later.
As an employee at one of the plants that were purchased by Ball Corp. I still have some concerns as to the benefits packsge offered by Ball. After 24 1/2 years working for the same MCC plant adn ebing treated like the preverbal ” RED HEADED STEP CHILD “, I breathe a sigh of relief that we are now going to become part of a very respected main stream Corporation like ball. However, I for one am concerned that we wil be losing some of the benefits that we have grown accustomed. First, MCC offered 4 weeks vacation after 25 years of employment and as you see I am within 6 months of that anniverary date. Next, is we were rewarded with quarterlt bonus that amount to around $6500.00 per year, based on plant preformance around a set of specific goals. Then there is 401k concerns, pesion plans and the list goes on. Not to mention the case of beer issued each month we worked without having a reportable injury.
If anyone have has input on these concerns I would love to hear form you.
July 01, 2009
Dear Colleagues,
Today we announced that we have reached an agreement to sell four metal beverage can and lid manufacturing plants from our U.S. metal packaging subsidiary, Metal Container Corp. (MCC), to Ball Corp., a world-class supplier of metal and plastic packaging to the beverage and food industries. We also announced that as part of the transaction, Ball will enter into a long-term supply agreement to continue to supply AB InBev with metal beverage cans and lids from the divested plants.
Attached is the press release we issued today, which provides more details on the transaction. In addition, I want to highlight a few important points:
The divested plants overall, as a group, are more focused on soft drink can production.
The divested can plants are located in Fort Atkinson, Wisconsin, Columbus, Ohio, and Rome, Georgia, and the divested lid plant is in Gainesville, Florida.
MCC’s remaining footprint, consisting of seven metal beverage can and lid manufacturing plants, as a group, will be more focused on beer-can production and represents more than 60% of MCC’s current capacity.
We have great respect for Ball, a supplier we know well and have worked with for many years, and are pleased to find a strategic buyer who shares our high opinion of these facilities and their people. To this end, Ball has committed, as part of the acquisition agreement, to offer employment to each active employee of the plants.
Cash generated from the sale will help us continue to pay down debt, and will reduce the amount of capital being employed in the production of beverage cans, while retaining packaging capability to support our beer business.
The transaction is still subject to certain conditions, including regulatory approvals, and, until closing, which we expect by the end of the year or early in the first quarter of 2010, it will be business as usual for all. We are committed to providing updates with you as soon as we can. Thank you for your continued hard work.
All the best,
Brito
ABInBev, in selling the can plants, is outsourcing their manufacturing. It makes good business sense. Unless they are selling to Ball Corp with a contract to buy the finished product back (cans), they are free to bid for the product at the lowest cost and have rid themselves of real estate, high labor, benefits, etc. Good decision by ABInBev. Now if they only made a good product to go inside of the cans.
Bigbob, read Brito’s letter I posted… “Ball will enter into a long-term supply agreement to continue to supply AB InBev with metal beverage cans and lids from the divested plants.”
jim63129-sorry, I thought the letter you posted was a joke, not the real thing. Depends on the terms and pricing of the long tern supply agreement. My experience is long term supply agreements is a good way to get screwed. Time will tell on this one.