Ball Aerospace is a leading supplier of mission-critical space systems and air, land and sea defense technologies. The acquirer believes it has strong growth potential in areas aligned with the highest priorities of the US intelligence community and the Department of Defense (or else we imagine it wouldn't have broken the piggy bank).

BAE hopes to finalize the deal in the first half of 2024, subject to the usual regulatory approvals and conditions. As a regular contractor to the Pentagon, the British company should be able to navigate the political hurdles that usually stand in the way of cross-border operations in sensitive sectors.

Ball Aerospace will add more than $2 billion in annual revenues to the Group, and strengthen its exposure in the USA, particularly in electronic warfare and C4ISR (Computerized Command, Control, Communications, Intelligence, Surveillance, Reconnaissance). BAE management estimates that the transaction will be accretive from the first year, with expected cost synergies of around $30 million per year. The price of $5.55 billion will include a tax benefit of $750 million.

BAE surperforme

BAE Systems has been boosted by the conflict in Ukraine, which has reawakened prospects for rearmament.

A little expensive

The transaction is valued at around 13 times fiscal 2024 EBITDA, net of the tax carrot and synergies, but at around 19 times long-term EBITDA, "which is quite high. which is "quite expensive compared to US Aerospace & Defense players trading at 13 times", notes Sejal Varshney, who follows the sector at AlphaValue, this morning. The analyst considers the deal to be positive from a strategic point of view, but rather costly and a source of increased debt, at a time when the market was rather optimistic. at a time when the market was more focused on the improvement in free cash flow generation recently announced by the Group.

At Jefferies, Chloé Lemarie hails the Group's strengthening in the space and electronics sectors, and shares her counterpart's sentiment. "We consider this operation to be well-suited, albeit slightly expensive", she concludes.