(Bloomberg) -- BAE Systems Plc agreed to buy the aerospace division of soda-can giant Ball Corp. for $5.6 billion, as the UK defense company seeks to expand its missile, space and munition products at a time of heightened weapons spending by governments.

The London-based defense giant entered into a definitive agreement to purchase the unit, which manufactures instruments and sensors for everything from space travel to weather forecasting, according to a regulatory filing on Thursday. Bloomberg News reported the companies were close to an agreement on Wednesday. 

If completed, the transaction would mark the biggest purchase yet in the company’s history and give BAE a presence in the fast-growing space sector, from where it has been largely absent. Olivier Brochet, an analyst at Redburn Atlantic, said that while the price paid looks high, it reflects the long-term value that can be derived from the asset.

BAE fell as much as 4.8% in London, it’s biggest drop in nine months, as investors weighed the cost of the purchase, which BAE called a “golden opportunity.” Ball had announced in June that it was exploring options for unit, drawing interest from other potential buyers besides BAE, including Blackstone and Veritas Capital Fund Management, according to a Reuters report at the time.

Before today, Britain’s top defense contractor had seen its shares rise almost a fifth this year as governments increase military spending. The company, which makes products including Queen Elizabeth-class aircraft carriers and is part of the consortium that makes the Eurofighter Typhoon fighter jet, raised its forecast for sales, profit and cash flow this month.

“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,” BAE Chief Executive Officer Charles Woodburn said in the statement. “The strategic and financial rationale is compelling, as we continue to focus on areas of high priority defense and intelligence spending.”

BAE’s pursuit of Ball’s aerospace unit comes as growing security threats across the globe spur a dealmaking rush in the defense sector that’s defying the broader drop off in mergers and acquisitions activity. 

If completed, the deal would represent this year’s largest acquisition by a UK company. BAE said the deal will be accretive to margins and earnings per share in the first year after completion. The company will fund the purchase with a combination of new external debt and existing cash resources, it said, adding that its capital allocation policy remains unchanged. 

Read More: BAE Drops; Ball Unit Deal Strategic But Expensive: Street Wrap

Ball’s aerospace business is headquartered in Colorado and has more than 5,200 employees — of which more than 60 hold US security clearances, BAE said. The UK company gets the biggest proportion of its revenue from the US, followed by the UK and Saudi Arabia, according to data compiled by Bloomberg.

The business that BAE is buying will generate about $2.2 billion in revenue this year and adjusted earnings before interest, tax, depreciation and amortization of about $310 million, BAE said.

BAE’s prediction that the Ball asset will grow revenue at about 10% over the next five years “helps justify the price,” said Nick Cunningham, managing partner at Agency Partners in London, who called the deal “a bolt on, albeit at the larger end.”

The value of transactions involving aerospace and defense companies has risen over the last 12 months, Bloomberg-compiled data show. Deals have included L3Harris Technologies Inc.’s $4.7 billion purchase of rocket engine maker Aerojet Rocketdyne Holdings Inc.

The sale allows Ball to focus on its core aluminum beverage packaging operations and reduce debt, which grew substantially following its multibillion-dollar purchase of Rexam Plc in 2016. The company has steadily sold assets since, including its Russian operations to Arnest Group for $530 million last year. 

Ball said in a separate statement that following the transaction, it “will be well-positioned to accelerate capital return to shareholders via share repurchases and dividends over a lower average invested capital base.”

--With assistance from Kate Duffy and Dinesh Nair.

(Updates with analyst comment in third, 11th paragraph.)

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