Ball Aerospace has manufactured spacecraft including contracts with Nasa, while also producing components and instruments for national defence projects. It previously worked on optics and mirror systems for Nasa's James Webb Space Telescope, which entered service last year.
BAE, which is one of the UK's largest arms producers, said the purchase was "aligned with the US Intelligence Community and Department of Defense's highest priorities". It has enjoyed bumper profits in recent months due to a raft of new orders in the wake of the Ukraine war.
Ball Aerospace is headquartered in Colorado, with more than 5,200 employees, of whom over 60 per cent hold US security clearances. It has built defence technologies including laser communication systems to link infantry and drones via satellite, and satellite tracking systems that allow spacecraft to monitor potential threats from other vehicles in space.
According to BAE, the purchase should help it to add more than $2bn in annual revenue from the growing space sector, in addition to the intelligence and missile and munitions markets.
The proposed acquisition will be funded by a combination of new debt taken on externally alongside existing cash reserves, although it will be subject to regulatory approval and is not expected to be completed until the first half of 2024.
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."
In February, BAE announced a partnership with the Home Office to develop data analysis technology that would be used to protect the UK's borders and simplify processes for traders and travellers.
