Ball Corp., based in Colorado and a global producer of aluminum packaging for beverages, has agreed to sell its aerospace business to BAE Systems, a British arms, security and aerospace company, for $5.6 billion in cash.
The deal will leverage recent investments by Ball Aerospace and Technologies Corp. in talent and facilities across the country and centered in Boulder, Broomfield and Westminster “to provide a multi-dimensional platform for vital national defense, intelligence, and science hardware, software, and space-based assets,” Daniel Fisher, Ball CEO and chairman, said in a statement Thursday.
The transaction, subject to regulatory approvals and closing conditions, is expected to close in the first half of 2024. Ball said the after-tax proceeds of the sale will allow it to reduce its debt and accelerate returns to shareholders through dividends and repurchase of stock.
The sale will also allow Ball Corp. to speed up initiatives focused on growing the company’s global aluminum packaging businesses, Fisher said in a call with investors.
“When we look at the backdrop of the world, as it relates to aluminum, things are moving much, much faster in parts of the world, Europe in particular. The regulatory environment is at a sprint,” said Fisher, referring to efforts to move from single-use plastic containers.
“There’s a lot more opportunity in the medium term than there was a year ago,” he added.
Ball reported net earnings of $173 million on sales of $3.57 billion for the second quarter, compared to a net loss of $174 million on sales of $4.13 billion for the same period in 2022. The company reported a net debt of roughly $8.8 billion for the quarter ending June 30.
Messages were left with the two companies for comment on what the acquisition will mean for Ball’s employees and facilities in Colorado. BAE Systems spokeswoman Lisa Malloy said in an email that the plan calls for Ball to initially be a standalone business unit.
“Ball Aerospace has made substantial investments in their people and facilities in Colorado and we value those investments and their skilled workforce,” Malloy said.
“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 is performing strongly and well positioned for sustained growth,” BAE Systems CEO Charles Woodburn said in a statement.
“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,” Woodburn added.
Ball Aerospace has about 5,200 employees. During a call with investors Thursday, BAE officials said Ball has a long and distinguished career and is a pioneering innovator. The company, which has government and commercial customers, has invested roughly $1.1 billion in its manufacturing facilities over the past five years.
“The business has grown significantly in recent years and has strong alignment with the U.S. intelligence community, Department of Defense and the U.S. government’s highest technology priorities,” Woodburn said.
BAE said it expects Ball Aerospace to add more than $2 billion in annual revenues to the company.
Ball CEO Fisher said the company began earlier this year to assess options for the aerospace business. Given the companies’ research and homework as well as conversations with customers, he believes the deal has a high potential of winning approval.
“There’s some uniqueness with what has to be submitted in the (United Kingdom), but all of those things, we believe, are in line to be less than a year and potentially faster than that,” Fisher said.
Ball Aerospace began in 1956 with a $35,000 cash investment by a son of one of the corporation’s founders, Fisher said. Collaborating with former University of Colorado scientists, the business started as Ball Brothers Research Corp.
The aerospace company built seven of the instruments that were on the Hubble Space Telescope, which was launched in 1990. A telescope imaging spectrograph built by Ball allowed astronomers to confirm the existence of black holes.
Ball Aerospace employees built a 21-foot mirror system to capture light from objects for the James Webb Space Telescope, the successor to Hubble. The Webb telescope is about 100 times more powerful than Hubble and was designed to see the light from the first stars and galaxies that shone about 13.5 billion years ago.
The images captured by the Webb telescope have included dying stars, the birthplace of stars and the formation of galaxies.
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August 18, 2023 at 06:26AM
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Colorado-based Ball Corp. to sell renowned aerospace business to British company for $5.6 billion - Boulder Daily Camera
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