BAE Systems (OTC:BAESY) agreed to a deal to purchase Ball Corp.'s (NYSE:BALL) aerospace business. This move is expected to improve margins and earnings per share in the first year after completion.
The acquisition will be funded using new external debt and existing cash resources. The purchase price represents a transaction multiple of around 13 times the estimated 2024 EBITDA after accounting for tax benefits and cost synergies.
“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,” said Daniel Fisher, chairman and chief executive officer.
The deal is expected to be finalized in the first half of 2024. BAE Systems will pay a termination fee of $100 million to Ball Corp. if the transaction is canceled.
The aerospace business is projected to generate revenues of around $2.2 billion and an adjusted EBITDA of about $310M in 2023.
Separately, Ball announced its intention to use share repurchases and quarterly dividends to increase value for shareholders.
Ball shares rose 5% in early Thursday trade on the news.