European Commission probes Ball’s £4.3bn proposed acquisition of Rexam

20 July 2015 (Last Updated July 20th, 2015 18:30)

The European Commission (EC) has launched an in-depth investigation into Ball's £4.3bn proposed acquisition of UK beverage can maker Rexam, due to concerns it may reduce competition in the beverage can and aluminium bottle manufacturing market in the European Economic Area (EEA).

Rexam

The European Commission (EC) has launched an in-depth investigation into Ball's £4.3bn proposed acquisition of UK beverage can maker Rexam, due to concerns it may reduce competition in the beverage can and aluminium bottle manufacturing market in the European Economic Area (EEA).

The EC believes that the combined market shares of both the companies would be very high at both EEA and regional level, upon completion of the proposed acquisition.

The remaining competitors would require a certain minimum size and a widespread network of production facilities to compete with the merged entity, which would own around two thirds of the plants located in Europe.

"It is therefore very important that the commission makes sure that Ball's takeover of Rexam does not restrict effective competition and so risk price increases that could be passed on to consumers".

European Commissioner for Competition Margrethe Vestager said: "Very many of us buy drinks in cans. They are convenient and used everywhere. It is therefore very important that the commission makes sure that Ball's takeover of Rexam does not restrict effective competition and so risk price increases that could be passed on to consumers".

The beverage can and aluminium bottle industry requires companies to ensure large customer orders and the significant investment required to build a plant, which makes entry and expansion difficult. Therefore, the deal could result in increase in prices.

The combined company is estimated to generate $15bn in revenue. It will serve packaging requirements in beverage, food, personal care, household product, and aerospace industries.


Image: Rexam operates 55 plants across 20 countries. Photo: courtesy of Rexam.