Drinks can makers Ball, Rexam launch $3 bln asset sale ahead of merger -sources

FRANKFURT, Feb 16 (Reuters) - Drinks can makers Ball Corp (N:BLL)
BLL.N and Rexam Plc REX.L have begun the process of selling
assets, potentially worth more than $3 billion, to meet
antitrust regulations ahead of their planned merger, several
people familiar with the matter said.
Both companies are expected to meet with representatives of
buyout groups Blackstone (N:BX) BX.N , Apollo APO.N , CVC CVC.UL ,
Onex OCX.TO and Madison Dearborn MDPRT.UL , as well as with
peers Silgan SLGN.O and Ardagh ARDGR.UL , before final bids
are due in mid-March, the sources said.
U.S.-based Ball's planned 4.4-billion-pound ($6.4 bln)
takeover of Britain's Rexam will merge the world's two largest
beverage can makers by volume - which supply Coca-Cola Co KO.N
and Anheuser-Busch InBev ABI.BR - and should improve
efficiency and cut costs. However, the deal triggered concerns
in the European Commission that it would drive up prices for
companies and consumers.
Ball said last week that it expects to close the merger in
the first half of 2016, after receiving conditional regulatory
clearance in Europe.
The two companies have offered to sell 12 plants across
Europe, 10 of which make cans and two produce can ends. Four of
the factories are in Germany and three in Britain. Separately,
Ball is selling about eight sites in the United States and
several in Brazil, also due to antitrust concerns.
Ball and Rexam as well as the potential bidders either
declined to comment or were not immediately available for
comment.
The assets on the block are expected to post $420 million in
annual earnings before interest, tax, depreciation and
amortisation this year and may be valued at up to eight to nine
times that in any potential deals, the sources said.
Peers trade at an average multiple of nine times their
expected core earnings.
While strategic players are often able to outbid private
equity groups in auction processes due to their ability to reap
synergies from a merger, the buyout groups may have an edge in
this sale: speed.
"The seller needs to have security that the deal goes
through smoothly to make the bigger merger work. And companies
like Silgan may have antitrust issues of their own, which could
delay any deal," one of the sources aid.
The source added that in Ardagh's case, debt levels may be
an issue. The Ireland-based group last year pulled a planned
initial public offering of its cans business, which would have
reduced its 4.8 billion euros of net debt, and it may now shy
away from taking on too much additional leverage to finance
another acquisition.
($1 = 0.6975 pounds)