ROMAN EWA - Nancy Grace Roman Space TelescopeBAE Systems plc has entered into a definitive stock purchase agreement to acquire the
Ball Aerospace business from Ball Corporation for around $5.55 billion in cash (subject to customary closing adjustments). The proposed stock transaction will be treated as an asset purchase for federal tax purposes, with an expected net present value tax benefit of circa $750 million making the underlying economic consideration for the business circa $4.8 billion. BAE Systems sees the Ball Aerospace acquisition as a unique opportunity to strengthen BAE Systems’ multi-domain portfolio.
Charles Woodburn, BAE Systems chief executive, 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 is 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.”
Ball Aerospace is a provider of spacecraft, mission payloads, optical systems and antenna systems with decades of proven success underpinned by advanced technologies. They have trusted customer relationships among the intelligence community, US Department of Defense and civilian space agencies. The business has been a pioneer in its markets for many decades and is organised into four main divisions: national defence; tactical solutions; civil space; and advanced technology and information solutions.
The business operates across a broad base of customers and platforms. It is well positioned in highly attractive markets, military and civil space, C4ISR, and missile and munitions. The space market exposure extends across defence, intelligence, and scientific missions. The Tactical Dolutions business is well positioned to capture expected increases in demand for missiles and munitions.
Advanced facilities and capabilitiesBall Aerospace is headquartered in Colorado, with more than 5,200 staff, of whom over 60% hold US security clearances. Over the last five years, the company has demonstrated its ability to convert its highly differentiated capabilities into a strong order backlog that has nearly doubled in size. It has invested around $1 billion in advanced facilities and capabilities which, combined with its highly skilled workforce, positions the business to deliver continued growth for years to come.
The proposed acquisition represents an exceptional opportunity for BAE Systems to strengthen its portfolio with significant scale and high-end technology capabilities. Ball Aerospace will add more than $2 billion in annual revenues in the growing space domain, C4ISR and missile and munitions markets. The acquisition will provide our US business with a position in some of the fastest growing segments of the defence market and further increases our alignment to enduring customer priorities embodied in the US National Defense Strategy.
The growth outlook, anticipated at around 10% annual compound growth rate over the next five years will build on BAE Systems’ US businesses existing strong portfolio by expanding its footprint in space by an order of magnitude, offering a complementary set of customer relationships in the national security space community and providing new access to civil space markets. In addition, Ball’s expertise in spacecraft, mission payloads, optical systems, sensors, scientific and tactical systems, analytical tools and antenna systems, support a broad set of products and differentiated technologies to address the growing space, C4ISR and missile and munitions markets.
Completion is subject to customary regulatory approvals and conditions with a targeted completion date in the first half of 2024.