BAE Systems to acquire Ball Aerospace for $5.55B

BAE Systems plc is acquiring the Ball Aerospace business from Ball Corp. for $5.55 billion in cash, subject to customary closing adjustments. The proposed acquisition will be funded by a combination of new external debt and existing cash resources. Completion is subject to customary regulatory approvals and conditions with a targeted completion date in H1 2024. The agreement includes a termination fee of $100 million payable by BAE Systems Inc. to Ball Aerospace’s parent company in the event the transaction is terminated if required regulatory conditions aren’t met within the agreed timeframe.

Ball Aerospace strengthens BAE Systems’ portfolio as a provider of space systems and defense technologies across air, land, and sea domains.

Ball Aerospace provides spacecraft, mission payloads, optical systems, and antenna systems to customers among the intelligence community, U.S. Department of Defense, and civilian space agencies. The business has been a pioneer in its markets since 1956 and is organized into four main divisions: National Defense, Tactical Solutions, Civil Space, and Advanced Technology and Information Solutions. The business has more than 5,200 employees, with more than 60% holding U.S. security clearances.

Ball Aerospace’s business is positioned in military and civil space; command, control, communications, computers, intelligence, surveillance, and reconnaissance (C4ISR); and missile and munitions. The space market exposure extends across positions in defense, intelligence, and scientific missions. Ball Aerospace notably has contributed to high-profile space exploration programs including the Orbiting Solar Observatory, Hubble Space Telescope, and the James Webb Space Telescope.

The new owner expects strong growth potential in areas aligned with the U.S. intelligence community and Department of Defense’s highest priorities. BAE Systems’ management foresees revenue of 10% CAGR during the next five years with scope to expand margins. The Tactical Solutions business is well positioned to capture expected increases in demand for missiles and munitions, according to BAE officials.

Among the reasons given for the acquisition, a BAE press release notes, “Throughout 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. It has invested around $1 billion in world-class facilities and capabilities which, combined with its highly skilled workforce, positions the business to deliver continued growth for years to come.”

Ball Aerospace brings to BAE’s bottom line more than $2 billion in annual revenues in the space domain, C4ISR, and missile and munitions markets. The acquisition will provide BAE’s U.S. business with a position in some of the fastest growing segments of the defense market and further increases the UK-headquartered company’s alignment to enduring customer priorities embodied in the U.S. National Defense Strategy.

BAE Systems Inc., the U.S. subsidiary of BAE Systems plc, is headquartered in Falls Church, Virginia. BAE Systems Inc. employs approximately 35,000 across its major operations in the United States, United Kingdom, and Sweden, and generated 2022 sales of nearly $12.6 billion. The company manufactures electronic systems and subsystems for military and commercial applications; produces specialized security and protection products; and designs, develops, produces, and provides service support of armored combat vehicles, artillery systems, and munitions. In commercial aerospace, BAE Systems provides aircraft avionics solutions and is investing in the development of flight and safety systems for future hybrid and all-electric aircraft.

“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’s performing strongly and well positioned for sustained growth,” says Charles Woodburn, chief executive of BAE Systems. “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 complementary cultural fit of Ball Aerospace and BAE Systems and their combined position as a pure play aerospace and technologies company will leverage Ball's recent investments in talent and facilities located across the country and centered in Boulder, Broomfield, and Westminster, Colorado, to provide a multi-dimensional platform for vital national defense, intelligence, and science hardware, software, and space-based assets,” says Daniel W. Fisher, Ball’s chairman and CEO.

Ball Corp. will now focus on developing its portfolio of aluminum cans, bottles, and cups for single-serve, refill, reuse, and recloseable applications.