BUSINESS LIVE: BAE Systems to buy Ball Aerospace for $5.6bn

Aarin Chiekrie, equity analyst at Hargreaves Lansdown:

‘BAE Systems has announced the acquisition of Ball Aerospace for a mammoth $5.55bn in cash. For perspective, that’s equivalent to almost 20% of BAE’s current market cap.

‘Ball Aerospace provides mission-critical space systems and defence technologies across air, land and sea – complementing BAE’s suite of products nicely. The acquisition should add around $2.2bn in revenue to BAE’s top line, before growing at a compound rate of around 10% annually over the next 5 years.

‘And given the similarities between the two businesses, there’s clear scope to streamline operations, cut costs and boost profit margins.

‘An acquisition of this size has only been made possible by BAE’s improved performance in recent years. Revenues and operating profits grew at double-digit rates in the first half and cash flows are much healthier now too, which has opened the door to deals like this as well as funding increased shareholder returns via dividends and new buyback programmes.’

Thousands of jobs at Wilko were in the balance last night after the deadline for interested bidders to submit a rescue offer passed.

The budget homewares retailer fell into administration last week, putting 12,000 jobs, 400 stores and the Wilko name at risk.

Richard Hunter, head of markets at Interactive Investor:

‘The February record highs for the FTSE100 are now a distant memory, with the weight of money seeming to have moved onto pastures new. Indeed, after another weak opening taken from global cues elsewhere, the index is now in negative territory for the year to date, having fallen 1.6%.

‘Further pressure came from the technical outcome of a number of heavyweight stocks being marked ex-dividend, such as GlaxoSmithKline, Imperial Brands and the London Stock Exchange Group.

‘Nor are the darkening clouds restricted to the premier index, which has a largely international bias. The more domestically focused FTSE250 has also slid into the red and now stands down by 1.8% so far this year. The initially positive reaction to the UK headline inflation number soon evaporated on closer inspection, as the core rate of inflation growth remained unchanged.

‘Not only does this show that these measures of inflation will be harder to shift, it also all but confirms more interest rate rises to come, thus heightening the possibility of a recession following behind.’

London-listed stocks look set for another day of losses driven by declines in defence stocks as BAE Systems slipped, while global sentiment has turned cautious after minutes from the US Federal Reserve’s July meeting were perceived to be hawkish.

Shares of BAE Systems are down 3 per cent after the British defence group said it agreed to buy Ball Corp’s aerospace business for about $5.55 billion in cash.

Bank of Georgia has gained over 11.5 per cent, leading gains among mid-caps, after the company reported higher quarterly pre-tax profit.

Precious metal miners have fallen 0.9 per cent as gold prices touch five-month lows on a stronger dollar and rise in bond yields.

As the Lionesses head to Sunday’s World Cup final showdown against Spain, a record number of women are betting on football.

A fifth of bets – 21 per cent – on England’s first three games were placed by women, says Ladbrokes and Coral owner Entain.

House prices in London fell for the first time since before the pandemic – and analysts warn the rest of the country may be ‘doomed to follow’.

The Office for National Statistics (ONS) said a typical home in London cost £528,000 in June, down 0.6 per cent, or just over £3,200, on the same month last year and the first time prices in London have fallen on an annual basis since November 2019.

It was the first decline in any region of England since May 2020 when prices in the North East fell.

Dubai’s state-owned ports giant DP World saw first-half profits fall nearly 10 per cent from a year earlier, even as revenue climbed nearly 14 per cent, and flagged an uncertain outlook for trade.

Profit attributable to DP World’s owners in the six months to June was down 9.7 per cent at $651million from a year earlier, when the port operator posted record profit of $721million.

‘While the near-term trade outlook may be uncertain due to macroeconomic and geopolitical factors, the solid financial performance of the first six months positions us well to deliver a steady set of full-year results,’ Chairman and chief executive Sultan Ahmed Bin Sulayem said.

A Vietnamese electric car maker that has never made a profit has been valued at more than Ford and General Motors.

Shares in VinFast – dubbed ‘the Tesla of Asia’ – listed on the New York stock exchange on Tuesday at $22 each before soaring to more than $37.

That gave the company, which has just 350 electric vehicles (EVs) on the road in North America, a value of £67billion, topping the market capitalisation of both GM and Ford at £36billion and £38billion respectively.

Defence giant BAE Systems has agreed to buy US manufacturer Ball Aerospace from Ball Corp in an all-cash deal worth around $5.55billion (£4.4billion).

Charles Woodburn, chief executive of BAE Systems, 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.

‘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 strategic and financial rationale is compelling, as we continue to focus on areas of high priority defence and Intelligence spending, strengthening our world class multi-domain portfolio and enhancing our value compounding model of top line growth, margin expansion and high cash generation.

‘We couldn’t be more pleased to have reached this agreement and we look forward to welcoming the employees of Ball Aerospace to BAE Systems as we work together to support our customers and create value for shareholders.’