BAE Systems to Acquire Ball Aerospace

One of the largest UK mergers of the year was announced today when BAE Systems, the country’s main defense contractor, announced that it had agreed to pay $5.6 billion (£4.4 billion) to acquire US company Ball Aerospace.

The London-based company announced that it has signed an agreement to acquire the Colorado-based company as part of an effort to increase its skills in the production of spacecraft and missiles during a time when national governments are increasing their spending on defense.

According to BAE, a combination of fresh external loans and already available financial resources would be used to pay for the acquisition.

The transaction is anticipated to be completed within the first half of 2019.

CEO Charles Woodburn stated: “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.”

For national governments, Ball Aerospace, a division of the Ball Corporation, develops spacecraft and defense systems.

More than 5,200 people work for the company, and more than 60% of them have US security clearances.

Ball Aerospace, according to BAE, will boost its space, missile, and munitions sectors’ annual revenues by more than $2 billion.

The Ball Corporation, which also creates packaging, stated that it would deleverage and “accelerate” capital return to shareholders through share repurchases and dividends with the money from the sale.

“BAE Systems is well-positioned to invest in Ball Aerospace to elevate the combined business to new heights, generate significant value for 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, CEO of Ball Corporation.

The transaction ranks as the second-largest British merger deal of the year, behind Dechra’s announcement in June that it will be acquired by Swedish company EQT for £4.5 billion.

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