BAE Systems plc announced on 17 August 2023 that it has entered into a definitive Stock Purchase Agreement to acquire the Ball Aerospace business of Ball Corporation for around USD 5.55 Bn (EUR 5.1 Bn) in cash, subject to customary closing adjustments.
Assuming the deal proceeds, it will be BAE Systems’ largest acquisition and the biggest by a UK company this year.
The proposed stock transaction will be treated as an asset purchase for federal tax purposes, with an expected net present value tax benefit of around USD 750 M making the underlying economic consideration for the business around USD 4.8 Bn, the company noted in a press release. The acquisition will be funded by a combination of new external debt and existing cash resources.
A leading provider of spacecraft, mission payloads, optical systems, and antenna systems to the US intelligence community, US Department of Defense and civilian space agencies, Ball Aerospace is headquartered in Colorado and has more than 5,200 employees, of whom more than 60% hold US security clearances.
BAE Systems noted in its press release that “Over the last five years Ball Aerospace has demonstrated its ability to convert its highly differentiated capabilities into a strong order backlog that has nearly doubled in size.”
The proposed acquisition, BAE said, “will add more than USD 2 Bn in annual revenues in the growing space domain, C4ISR and missile and munitions markets”, adding that Ball Aerospace’s portfolio is “highly complementary” to that of its own.
Commenting on the announcement, Charles Woodburn, Chief Executive of BAE Systems, said, “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.
“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.”
Completion of the acquisition is subject to customary regulatory approvals and conditions, with a targeted completion date in the first half of 2024. The Agreement to acquire Ball Aerospace includes a termination fee of USD 100 M payable by BAE Systems Inc to Ball Aerospace’s parent company if the transaction is terminated because certain required regulatory conditions are not met within the agreed timeframe.
Peter Felstead
