Britain’s largest defense company, BAE Systems, has agreed to purchase Ball Corp’s aerospace assets for approximately $5.55 billion, marking its biggest deal ever. The purchase will expand BAE’s reach into the space, national security, and intelligence sectors. Ball Corp intends to use the proceeds to reduce its $9.7 billion debt and invest in its global packaging operations. The deal is expected to close in the first half of 2024.
  

Key Points: 

1. Deal Details: BAE Systems is acquiring Ball Corp’s aerospace division, a prominent U.S. contractor that builds spacecraft, instruments, and sensors for defense and civil satellites. The cash deal is valued at $5.55 billion.
2. Strategic Fit: The acquisition aligns with a broader industry trend towards scaling operations to capitalize on increased demand for defense products, especially given the shift in priorities to space domains and climate monitoring. Jefferies analysts deem the deal a good fit, though slightly expensive.
3. Impact on Ball Corp: Ball Corp, the world’s largest supplier of beer cans, will use the proceeds to cut down its debt, return money to shareholders, and accelerate organic growth in its global packaging business.
4. BAE Systems’ Expansion: This acquisition highlights BAE’s continued growth fueled by increased global military spending, and will add to its earnings per share and margins post-completion.
5. Market Reaction: Shares of BAE Systems fell by as much as 4.9%, while Ball Corp’s shares rose by 2.7% in premarket trading following the announcement of the deal.

Source: https://www.reuters.com/markets/deals/uks-bae-systems-buy-ball-aerospace-about-555-bln-2023-08-17/