Acquisitions and Dispositions

3 Months Ended

Mar. 31, 2024

Acquisitions and Dispositions

Acquisitions and Dispositions

4.     Acquisitions and Dispositions

Dispositions

Discontinued Operations

Aerospace

In the third quarter of 2023, Ball entered into a Stock Purchase Agreement (Agreement) with BAE Systems, Inc. (BAE) and, for the limited purposes set forth therein, BAE Systems plc, to sell all outstanding equity interests in Ball’s aerospace business. On February 16, 2024, the company completed the divestiture of the aerospace business for a purchase price of $5.6 billion, subject to working capital adjustments and other customary closing adjustments under the terms of the Agreement, which are expected to be resolved mid-2024 and could impact the gain recognized. The divestiture resulted in a pre-tax gain of $4.67 billion, which is net of $20 million of costs to sell incurred and paid in 2023 related to the disposal. Cash proceeds received at close from the sale of $5.42 billion, net of the cash disposed, are presented in business dispositions, net of cash sold, in the unaudited condensed consolidated statement of cash flows for the three months ended March 31, 2024. The company expects to pay approximately $1.00 billion in income taxes related to the transaction throughout 2024, which are recorded in other current liabilities in the unaudited condensed consolidated balance sheet. Additionally, the completion of the divestiture results in the removal of the aerospace business from the company’s obligor group, as the business will no longer guarantee the company’s senior notes and senior credit facilities.

The sale of the aerospace business represents a strategic shift that will have a major effect on Ball’s operations and financial results, including the removal of the aerospace reportable segment. Due to this shift, for all periods presented, the consolidated financial statements reflect the aerospace business’ financial results as discontinued operations in the unaudited condensed consolidated statements of earnings, and its assets and liabilities are presented as assets and liabilities held for sale in the unaudited condensed consolidated balance sheet as of December 31, 2023. See Note 1 for further information on the basis of presentation.

The following table presents components of discontinued operations, net of tax for the three months ended March 31, 2024 and 2023:

	Three Months Ended March 31,
($ in millions)	2024		2023
Net sales	$	261	$	508
Cost of sales (excluding depreciation and amortization)		(214)		(413)
Depreciation and amortization		(9)		(19)
Selling, general and administrative		(11)		(16)
Gain on disposition		4,695		—
Tax (provision) benefit		(1,115)		(8)
Discontinued operations, net of tax	$	3,607	$	52

The following table presents assets and liabilities that are classified as held for sale on the unaudited condensed consolidated balance sheet as of December 31, 2023:

	December 31,
($ in millions)	2023
Assets
Current assets
Receivables, net	$	277
Other current assets		56
Total current assets		333
Noncurrent assets
Property, plant and equipment, net		665
Other assets		188
Total assets of discontinued operations	$	1,186
Liabilities
Current liabilities
Accounts payable	$	92
Accrued employee costs		88
Deferred revenue		221
Other current liabilities		34
Total current liabilities		435
Noncurrent liabilities
Employee benefit obligations		163
Other liabilities		74
Total liabilities of discontinued operations	$	672

The following table presents significant cash flow items from discontinued operations for the three months ended March 31, 2024 and 2023 included within the consolidated statements of cash flows. Amounts include adjustments to reconcile net earnings to cash provided by (used in) operating activities:

	Three Months Ended March 31,
($ in millions)	2024		2023
Provided by (used in)
Depreciation and amortization	$	9	$	19
Gain on Aerospace disposal		(4,695)		-
Capital expenditures		(13)		(24)

Noncash investing activities include the acquisition of property, plant and equipment (PP&E) for which payment has not been made. These noncash capital expenditures are excluded from the consolidated statements of cash flows. A summary of the PP&E acquired but not yet paid for from discontinued operations is as follows:

	Three Months Ended March 31,
($ in millions)	2024		2023
Supplemental cash flow information:
PP&E acquired but not yet paid	$	17	$	16