The producer of circular aluminum packaging for beverage and household brands, Ball Corp. (NYSE: BALL) jumped at the time of writing on Thursday after announcing the sale of its aerospace business to BAE Systems (BAESF) for gross proceeds of $5.6 billion in cash. This transaction value is 19.6 times Ball Aerospace’s last twelve months (LTM) comparable EBITDA (as of June 30, 2023). The sale is expected to close in the first half of 2024.
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The sale is expected to result in $4.5 billion in after-tax proceeds for BALL and along with a robust free cash flow due to its core packaging operations, the company plans to reduce its net debt. This move is projected to align the company’s expected 2023 comparable EBITDA with a lower leverage ratio of around 3.0x, effectively fortifying its long-term financial stability.
The company is expected to transform from aerospace to a more focused packaging business which is likely to result in increased value for its shareholders through share repurchases and dividends.
Analysts remain sidelined about BALL stock with a Hold consensus rating based on one Buy and 10 Holds.
