Ball Corporation (BLL - Free Report) has inked a deal to purchase leading extruded aluminum aerosol packaging producer, Envases del Plata S.A. de C.V., with a manufacturing facility in San Luis Potosi, Mexico. The financial terms of the deal were not disclosed. The transaction is expected to close by the end of October this year.
The plant at San Luis Potasi manufactures extruded aluminum aerosol cans which are used both for personal care and household products by the customers in America. After the completion of the acquisition, the plant will be included in the Food & Household Products Packaging Division, Americas.
The plant will complement Ball Corp.’s existing aluminum aerosol business in Europe, Ball Aerocan, and the North American extruded aluminum aerosol slug business which the company acquired in 2010.
Furthermore, Ball Corp. and Envases del Plata group have decided to form a joint venture in Argentina. Under the deal, Ball Corp. will own 25% of the joint venture while Envases will own the remaining 75%.
The joint venture, which will be known as Envases-Ball, would comprise the steel aerosol can plants of Ball Corp. at Buenos Aires and San Luis in Argentina. On the other hand, the extruded aluminum packaging plants of Envases, located at Buenos Aires and San Luis in Argentina as well as Manaus, Brazil, will be included in the joint venture.
The deals fit in well with Ball Corp.’s Drive for 10 strategy that aims at expanding its geographical footprint as well as product portfolio. The company will get the opportunity to improve its technologies in the manufacturing of extruded aluminum packaging and cater to a wide client base in North America as well as in Argentina and Brazil.
The company’s decision to expand its product portfolio in extruded aluminum packaging is expected to boost its revenues moving ahead. It will help Ball Corp. gain market share in the rigid packaging industry where it faces tough competition from national as well as local companies.
Ball Corp. retains a short-term Zacks #2 Rank (Buy). We have a long-term Neutral recommendation on the stock.