BAE Systems plc has agreed to acquire the Ball Aerospace business from US-based Ball Corporation for around £4.4 billion in cash.
The asset purchase will provide an expected tax benefit of around $750m (£589m), BAE said.
Ball Aerospace provides space systems and defence technologies across air, land and sea domains. These include spacecraft, mission payloads, optical systems and antenna systems with decades of development behind them.
The proposed deal will add more than $2bn in annual revenues in the growing space domain, C4ISR and missile and munitions markets, BAE said. Ball Aerospace counts the intelligence community, US Department of Defense and civilian space agencies as clients. It is expected to achieve adjusted EBITDA of approximately $310m in 2023.
The business is headquartered in Colorado, with more than 5,200 employees, of whom over 60% hold US security clearances.
The deal, to be funded by a combination of new external debt and existing cash resources, expects to complete in the first half of 2024. The agreement includes a termination fee of $100 million payable by BAE Systems to Ball Aerospace’s parent company in the event the transaction is terminated because certain required regulatory conditions are not met within the agreed timeframe.
“The proposed acquisition of Ball Aerospace is a unique opportunity to add a high-quality, fast-growing technology focused business with significant capabilities to our core business that is performing strongly and well positioned for sustained growth,” said Charles Woodburn, chief executive of BAE Systems.
“It’s rare that a business of this quality, scale and complementary capabilities, with strong growth prospects and a close fit to our strategy, becomes available.
“The strategic and financial rationale is compelling, as we continue to focus on areas of high priority defence and Intelligence spending, strengthening our world class multi-domain portfolio and enhancing our value compounding model of top line growth, margin expansion and high cash generation.
“We couldn’t be more pleased to have reached this agreement and we look forward to welcoming the employees of Ball Aerospace to BAE Systems as we work together to support our customers and create value for shareholders.”