Market report

BAE Systems buys Ball | Ex-Capricorn boss’s new role

BAE Systems is acquiring Colorado-based Ball Aerospace from Ball Corporation for c.$5.55 billion in cash.

The asset purchase will provide an expected tax benefit of around $750m (£589m), BAE said.

Ball is a provider of mission critical space systems and defence technologies across air, land and sea domains. It has strong growth potential in areas aligned with the US Intelligence Community and Department of Defense’s highest priorities.

Charles Woodburn, Chief Executive of BAE Systems, said: “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.”

Russ Mould, investment director at investment platform AJ Bell says: “BAE Systems’ deal for US industrials firm Ball’s aerospace arm is a reminder there is more to the business than just being a maker of armaments.

“BAE is looking to expand in nascent sectors like space as well as build on its capabilities in electronics and this deal looks a decent fit in both areas.

“The only downside is the $5.6 billion price tag which looks a touch on the expensive side and potentially explains the initial lukewarm reaction from shareholders to the deal. The cost will raise the pressure on the company to execute smartly on the integration process. Assuming it hits the targets it has outlined then it should be earnings accretive in the short term.

“The fact BAE has been able to carry out a transaction like this with a minimum of fuss is in itself testament to its improved fortunes.”

Shares in BAE Systems fell 4.6% or 46.75p to 955.75p.

New role for ex-Capricorn Energy boss

The former CEO of Capricorn Energy who was forced out of the Edinburgh-based company in a shareholder coup in January has been appointed chairman of Rockhopper Exploration.

Simon Thomson joined Capricorn (formerly Cairn Energy) in 1995 as a lawyer and led the oil company from 2011. He left before a shareholder vote that followed two unpopular merger proposals.

Mr Thomson, 58, will take up his new role with the Falklands-focused oil explorer from October. He will be joined by Paul Mayland, 55, his long-serving chief operating officer at Capricorn, who will become an independent non-executive director.

Markets lower on China woes

The FTSE 100 fell 46.67 points to 7,310.21, a fall of 0.6%, as traders focused on the global economy.

The China slowdown rattled markets and the possibility of another rate rise by the Fed raised fears of a deeper downturn in the US.

Surprisingly, miners were higher, with Rio Tinto up 1.7%, or 77p, to 4636p, and Glencore rose 1% at 423.5p, up 4p.

Gambling group Entain, whose brands include Ladbrokes and Sportingbet, suffered a further bout of selling after setting aside £585 million to settle an HMRC investigation. The shares were down 59.5p or 4.8% to 1174p.

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