LONDON—BAE Systems has emerged as the suitor for Ball Aerospace, after the latter’s parent company put the business up for sale in June.
BAE will buy the U.S. defense and aerospace electronics supplier for $5.55 billion through a stock purchase agreement, the two companies announced Aug. 17.
The acquisition, BAE’s largest yet, will grow its U.S. revenue share to 47% and broaden the company’s satellite and space payload capabilities—an area BAE Systems has been eager to grow into, CEO Charles Woodburn suggested while releasing the company’s half-yearly results earlier this month.
“It is rare that a business of this quality, scale and strategic fit with such strong growth prospects becomes available,” Woodburn told investors following the announcement to the markets, noting that Ball Aerospace had been “high on our list of potential opportunities.”
Ball’s Colorado-based aerospace unit produces spacecraft, instruments and sensors, radio frequency systems and components, data exploitation solutions and a variety of advanced technologies and products that enable weather prediction and climate change monitoring as well as deep-space missions, according to Ball’s latest annual regulatory filing. BAE Systems says Ball has developed trusted customer relationships within the Intelligence Community, U.S. Defense Department and civilian space agencies.
About 70% of Ball Aerospace’s $2.2 billion annual turnover is focused on space systems, much of which is related to defense, while more than 60% of its 5,000-strong workforce have security clearance.
BAE sees the business as highly complementary to its existing work in the U.S., with little overlap, which BAE hopes will help garner support from an “anti-trust standpoint,” according to Tom Arsenault, CEO of BAE’s U.S.-based business.
“This is not a sort of vertical integration,” Arsenault adds. Both BAE and Ball Aerospace “represent solid merchant suppliers across the industry and so that will be our intent to continue,” he says.
“BAE Systems is well positioned to invest in Ball Aerospace to elevate the combined business to new heights, generate significant value to critical mission partners, offer customers more affordable solutions and enable a safer world for all stakeholders benefiting from today’s agreement,” says Daniel Fisher, Ball Corporation’s chairman and CEO.
BAE largely left the satellite business in 1994 when it sold its Space Systems business to Matra, which later became part of Airbus Defense and Space. But with space becoming an area of growth for militaries once again, BAE’s interest in the domain was revitalized and in 2021 the company acquired UK-based small satellite manufacturer In-Space Missions while looking for other opportunities. “Across defense portfolios we’ve seen the relevance of space in the ongoing conflict in Ukraine and it’s definitely an area of growth,” Woodburn told investors.
BAE will purchase Ball Aerospace through a combination of new external debt and existing cash resources. The deal is expected to be completed in the first half of 2024, pending regulatory approval.
