Italian aerospace and defense company Finmeccanica agreed to buy the US military contractor DRS Technologies for â‚¬3 billion (US$4 billion), an Associated Press report said.
The deal is expected to make Italy's leading defense company a 'key player' in the US defense market, the report said.
Rome-based Finmeccanica will pay â‚¬52.50 (US$81) per share in cash, representing a 32% premium over DRS's 30 day average stock price.
The deal includes â‚¬780 million (US$1.2 billion) in net debt, the Associated Press report said.
While Finmeccanica boosts its international role as a key supplier of defense and security systems, DRS hopes the new company will be able to bid on large-scale projects in the US and abroad.
Finmeccanica joins Airbus parent EADS as a European company pushing into the lucrative US defense and security market, following EADS' partnership with Northrop Grumman to sell mid-air refueling tankers to the Air Force and its purchase of PlantCML, a California emergency call center company, the report said.
To satisfy US regulations for foreign-owned defense companies, DRS will keep its own board of directors comprised mostly of US citizens holding high security clearance and a special oversight board. It will maintain its current management and headquarters, located in Parsippany, New Jersey, the report further said.