17th Aug 2023 08:07
(Alliance News) - BAE Systems PLC on Thursday said it has agreed to buy the Ball Aerospace business from Ball Corp for about USD5.55 billion, in cash.
Ball Aerospace provides mission critical space systems and defence technologies across air, land and sea, and will serve to strengthen BAE's multi-domain portfolio. The business is headquartered in Colorado, with more than 5,200 employees.
It has "strong growth potential" in areas aligned with the US Intelligence Community and Department of Defense's highest priorities, BAE Systems said.
Further, the acquisition will add to an "attractive and strengthened" revenue outlook for BAE Systems. It noted that there is expected revenue compound annual growth rate of about 10% over the next five years with scope to expand margins.
The acquisition is also anticipated to be accretive to margins and earnings per share in the first year post completion including run-rate cost synergies.
In 2023, the business is expected to achieve revenues of approximately USD2.2 billion and adjusted earnings before interest, tax, depreciation and amortisation of approximately USD310 million in 2023.
"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. 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," said BAE Chief Executive Charles Woodburn.
Completion is subject to customary regulatory approvals and conditions with a targeted completion date in the first half of 2024. The agreement includes a termination fee of USD100 million payable by BAE to Ball Aerospace's parent company in the event the transaction is terminated.
The acquisition will be funded from a combination of new external debt and existing cash resources.
BAE Systems shares fell 4.5% to 969.00 pence each on Thursday morning in London.
By Sophie Rose, Alliance News reporter
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