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(Reuters) - British defense contractor Ultra Electronics said it would buy Sparton Corp for $23.50 per share, giving the maker of anti-submarine warfare devices used by the U.S. Navy an enterprise value of about $234.8 million.
The deal will create a major supplier in the underwater warfare market, including to the U.S. Department of Defense, Ultra Electronics said.
Ultra Electronics said it worked with Sparton's engineered components and products unit in a joint venture for over 10 years.
"This close relationship has benefited our major customer, the US DoD, through more effective use of the available engineering budget," the British firm said.
U.S. President Donald Trump has sought what he called a "historic" increase in defense spending and has criticized European nations for low defense spending.
Ultra Electronics will raise capital to partly fund the deal, by placing 9.9 percent of its shares under issue.
The deal is expected to close by Jan. 1, 2018.
Reporting by Noor Zainab Hussain in Bengaluru; Editing by Amrutha Gayathri