ne of the biggest UK mergers of the year was unveiled today as Britain’s top defence contractor BAE Systems said it had reached an agreement to buy US firm Ball Aerospace in a $5.6 billion (£4.4 billion) deal.
The London-based business said it had reached an agreement to buy the Colorado-based business as part of a push to expand its capabilities in spacecraft and missile development amid a period of heigtened defence spending by national governments.
BAE said the acquisition would be funded by a combination of new external debt and existing cash resources. The deal is expected to close in the first six months of next year.
CEO Charles Woodburn said: “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.”
Ball Aerospace, a subsidiary of the Ball Corporation, designs spacecraft and defense systems for national governments. The firm has more than 5,200 employees, of whom over 60% hold US security clearances.
BAE said Ball Aerospace will add more than $2bn in annual revenues to its space, missile and munitions markets.
The Ball Corporation, which also designs and produces packaging and employs 21,000 people worldwide, said it would use the proceeds of the deal to deleverage and “accelerate” capital return to shareholders via share repurchases and dividends.
“BAE Systems is well-positioned to invest in Ball Aerospace to elevate the combined business to new heights, generate significant value to critical mission partners, offer customers more affordable solutions and enable a safer world for all stakeholders benefitting from today’s agreement,” said Daniel W. Fisher, Ball Corporation CEO.
The deal is the second biggest British merger deal of the year after pharmaceuticals business Dechra announced it would be taken over by Swedish business EQT for £4.5 billion in June.
More to follow