The deal effectively gives BAE control of Atlantic Marine's four shipyards situated along the U.S. Gulf and East coasts. The private equity firm, Lehman, will retain operations in Boston and Philadelphia.

BAE's interest in the Atlantic goes back several years. It is believed that the London defense giant was a potential buyer when Lehman tried to sell the shipyards two years ago.

The shipyards are an attractive asset for BAE as operations take greater strain on vessels and the U.S. Navy focuses on missile defense.

"The priority is to provide fabrication and readiness and sustainment capabilities to the U.S. Navy. There is no suggestion at the moment of us entering the construction business," said a BAE spokesman told Defense News.

Linda Hudson, president and chief executive of the company's U.S. operations, said, "BAE's strategy for our ship repair business is successfully growing marine sustainment activities in surface ship repair, as well as migrating our capabilities into naval modernization and upgrade."

BAE, which has made no secret of its intentions to expand operations in the United States, is the leading provider of non-nuclear ship repair, conversion and overhaul for the U.S. government and commercial clients.

The deal marks BAE's first acquisition in the United States since the company unveiled designs to pick up MTC Technologies for $450 million.

In a statement, BAE said the group forecast increased demand for support U.S. naval capabilities.

"The acquisition is consistent with BAE Systems' strategy to address anticipated growth in readiness and sustainment activity within its home markets. The addition of Atlantic Marine will enhance BAE Systems' ability to support current and future U.S. Navy homeporting strategies and broaden its customer base," the statement said.

The landmark deal comes as the U.S. Navy moves to shrink its size to accommodate a more moderate procurement program charted by a cost-conscious Pentagon. The focus of the plan is less on expensive new ships, experts say, and more on legacy designs.

Large-scale naval projects, including the CG(X) next generation cruiser, for example, have been scrapped and trumped by the construction of legacy hulls.

Last year, Defense News reports, "BAE boosted its U.K. warship business by acquiring the VT Group's 45 percent share of the BVT Surface Fleet business."

It said it had also set up a support joint venture with Abu Dhabi Shipbuilding and was exploring opportunities in the Indian naval market.

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