MAGGIE PAGANO: BAE flies to the final frontier with Ball Aerospace deal

BAE Systems’ blockbuster bid for Ball Aerospace is a scorcher, taking the UK defence company deeper into space, one of the few booming industries left for both civil and military exploration.

It’s the biggest takeover by a British company this year, and the most sensitive, yet not a peep leaked to markets.

And for once it’s a takeover going in the right direction across the Atlantic – from east to west rather than the usual one-way traffic of US predators snapping up British firms on the cheap.

This time the UK’s BAE is the predator, paying top dollar for the US space technology group which sells high-tech satellite equipment to Nasa and the Pentagon, and also works with the Hubble and James Webb telescopes.

It’s the biggest takeover in BAE’s history, one that demonstrates a new-found confidence after the extraordinary turnaround in its fortunes over the last few years.

Moon shot: BAE Systems’ blockbuster bid for US space technology group Ball Aerospace is the biggest takeover by a British company of the year

Helped by higher global defence spending, and war in Ukraine, BAE shares have rocketed by more than 70 per cent since the start of last year and, according to the more optimistic analysts, have further to fly.

Investors who have shunned BAE because of their strict interpretation of ESG must be secretly biting their tongues.

The price at £4.4billion is full, and BAE’s shares dived as investors digested the deal. That’s understandable, and puts pressure on management to integrate the respective space businesses more quickly.

It was also worth paying a premium to get ahead in the race to the final frontier as BAE faced stiff competition from rivals such as General Dynamics and Textron.

Going into space is a huge market – in the US alone it is forecast to be worth $200billion (£156.7billion). BAE sees potential to grow both Ball’s civil and military businesses.

On the civil side, Ball has close relations with the US body that provides daily weather forecasts and climate monitoring.

And in defence Ball is big on what in the jargon is called ‘C4ISR’ – command, control, communications, computers, intelligence, surveillance and reconnaissance.

No wonder nearly two-thirds of Ball’s 5,200 staff have US security clearance, allowing them to work on sensitive military technologies. 

Buying the Colorado business also strengthens BAE’s operations in the US, which is the firm’s biggest market, representing about 44 per cent of revenues.

This month BAE, makers of the Vanguard submarines and Typhoon fighter jets, reported record orders since Russia invaded Ukraine. One of the unintended consequences of the war is that defence firms are running out of munitions and weaponry.

Paradoxically, this is pushing countries to look at alternative forms of surveillance, such as those created and made by Ball.

Wherever you stand on war and defence manufacturers it’s some comfort to know that the UK has one of the world’s best and that it is planning ahead.

The big question now is whether the highly protectionist US authorities clear the deal.

Chinese twitches

The markets are twitchy. Bond yields in the US and the UK are on the move again as traders adjust their bets that interest rates will go higher and stay higher for longer than expected. 

The much stronger Figures for US growth have thrown investors into confusion as the economy is proving more resilient than expected.

Even the Federal Reserve appears unsure about which way next but is expected to give some guidance at next week’s meeting of central bankers at Jackson Hole in the US. 

There are jitters, too, in China where GDP forecasts are being slashed after recent indicators showed the economy is running out of steam.

Big state-owned banks have been offloading US dollars to buy yuan in the onshore and offshore spot foreign exchange markets, hoping to halt the fall in the currency.

The yuan’s fall demonstrates fears that weaker growth and default risks in property companies like Evergrande and Country Garden, and in its shadow banking sector, will trigger a run.

More interesting is that the Chinese authorities have yet to make serious moves to restore confidence.

Maybe they can’t decide what to do?

Rainy bingo

There is always a silver lining. Mecca reports a bingo bounce-back because of the lousy weather.

A little rain on holiday always makes the best memories: sneaking into dodgy arcades and bowling alleys that are usually off-grid.

This post first appeared on Dailymail.co.uk