Rexam board backs Ball Corp

Flat figures from Rexam - whose customers include Coca-Cola and PepsiCo - threaten to take the fizz out of market sentiment. As flagged in November's profit warning, adverse currency effects and high aluminium prices wreaked havoc on its earnings: they wiped £73m off underlying operating profit, which came in at £418m - a 7 per cent contraction year on year. Rexam also experienced tough trading conditions in the US and Russia, but that was partly offset by an 18 per cent rise in volumes of speciality cans in Africa, Asia and the Middle East as the group's hefty emerging markets investments paid off.

Other sunshine in the results included a 4 per cent rise in beverage can volumes, thanks mainly to the World Cup, good weather and the carnival in Brazil. But the absence of a major football competition, a new tax on beverages and a weakened Brazilian economy was enough to convince management that business would "slow significantly" in the country through 2015. Rexam is working to drive growth elsewhere; it recently took a majority stake in United Arab Can Manufacturing for $122m (£79m). This two-line plant has an annual capacity of 1.8bn cans, and management expects to add a third production line in the coming months. Rexam also plans to open a new facility in Sri City, southern India later this year to complement operations in Mumbai.

Overseas investments, together with renewed cost-cutting initiatives, underpin Rexam's response to rising aluminium prices and competitive pressures. It expects restructuring activities to deliver annual savings of £50m from 2017, at a cost of £140m over the next three years.

Ball's offer represents a 5 per cent premium to broker Jefferies' discounted cash-flow valuation of 598p.