Rexam £4.3bn takeover talks send shares soaring

Shares have spiked massively at aluminium can manufacturer Rexam after it admitted to talks with a US rival for a potential £4.3bn takeover.

The proposals value the London-listed group, which makes cans for the likes of Coca-Cola, AB InBev and Heineken, at 610p a share – a huge 36% premium to the opening price of 449.3p this morning. An offer – which has yet to be formally made – would be made up of two-thirds cash and the rest in equity in Ball Corporation.

Rexam’s stock jumped 12% in the early going as market chatter surfaced about interest from US private equity firms before continuing to rocket to 547p (a rise of 22.2%) as the company confirmed it was in talks with Ball Corporation.

Headquartered in Colorado, Ball makes cans for beverages, foods, aerosols and paint, as well as materials for the aerospace industry. Today, it posted net earnings of $470m (£307.2m) in 2014 on sales of $8.6m (£5.6m), compared with $406.8m and $8.5bn in 2013.

Rexam made an underlying pre-tax profit of £166m in its latest results for the six months to 30 June 2014, with sales down 5% to £1.88bn.

The media wasn’t alone in being wide of the mark about an imminent PE offer, analysts had also played down the prospects of a trade deal being in the offing, as well as predicting a sale price of between 520p and 550p a share.

“Discussions on other matters are continuing and there can be no certainty any formal offer will be forthcoming, or as to the terms of any offer,” Rexam said in a statement to the stock exchange.