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Rexam and Ball merger to create tin can giant

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Drinks can maker Rexam (LON:REX) has agreed to a takeover by US rival Ball Corporation, a deal that would combine the world’s two largest beverage can makers by volumes.

Ball, a US packaging company, has made a cash and shares offer valuing Rexam at £4.43bn, which has been recommended by the company’s board. Rexam's current market value stands at £3.9bn.

The pair, both suppliers to Coca-Cola and Pepsi, have been under pressure from higher aluminium prices and the merger is set to result in significant cost synergies.

Along with the offer recommendation, FTSE 250-listed Rexam today said its underlying profit before tax for 2014 fell to £418mln from £449mln in 2013.

"In a difficult year, we delivered a good performance” said Graham Chipchase, Rexam's chief executive .

“It has been a great team effort in the face of unprecedented rises in metal premiums, the impact of foreign currency translation and some pricing pressure.

"We expect 2015 to present a tough trading environment with headwinds from metal premium, foreign exchange volatility and pricing pressure.

“However, we are taking steps to address these through further improvements in productivity to make sure we are delivering cost leadership and continuing to invest in growth capacity to enhance our strong market positions."

Rexam shares were up 3% to 557p in early deals.

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