Ball Corporation to sell its aerospace business to BAE Systems for $5.55 billion

Ball Corporation, the world's leading producer of circular aluminum packaging for global beverage and household brands, is reportedly selling its aerospace business to BAE Systems for $5.55 billion in cash. The news came on Thursday, August 17, after the company announced its agreement with BAE Systems, a British multinational arms, security, and aerospace company based in London, UK.

The transaction is estimated to close in the first half of 2024, subject to regulatory approvals and customary closing conditions and adjustments.

According to Reuters, BAE Systems successfully signed an agreement with Ball Corporation after competing with General Dynamics Corp and Textron, who also tried to buy the business.

Once the deal is closed successfully, the combination of nearly half of the after-tax proceeds i.e. $4.5 billion and robust free cash flow generated from the company's packaging operations will be used to reduce net debt. The company will then be well-positioned to accelerate capital return to shareholders via share repurchases and dividends over a lower average invested capital base.

"Since 1956, generations of dedicated Ball Aerospace colleagues have transformed a business of humble beginnings into a thriving enterprise offering innovative capabilities in a world that needs rapid, scalable technology solutions. In recent years, the business has positioned itself to have an even greater contribution to customers' missions and delivered fourfold growth and record levels of combined contracted and won-not-booked backlog. 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. We thank the entire Ball Aerospace team for their hard work and celebrate their commitment to continue to deliver on critical missions. 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 benefitting from today's agreement," said Daniel W. Fisher, chairman and chief executive officer.

Fisher added, "Following the successful closing of today's transaction, Ball Corporation's improved balance sheet strength and flexibility, highly cash generative packaging businesses and our team's cost-efficient ownership mindset provide an excellent equation for increasing the return of value to shareholders, maximizing value from our existing operations, and investing in our future growth through the lens of EVA. Executing our strategy of enabling the greater use circular aluminum packaging on a global scale continues. Our acceleration of low-carbon, best-value aluminum packaging initiatives in the years to come will stimulate organic growth across our global packaging operations and improve the world for future generations. Our innovative portfolio of aluminum cans, bottles and cups for single-serve, refill, reuse and recloseable applications has untapped potential, and we look forward to unlocking that value and delivering sustainable compounding shareholder growth now and beyond."