BAE builds the British Army's Challenger tanks
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UK defence giant BAE Systems has agreed to buy US-based Armor Holdings in a deal worth $4.5bn (£2.27bn).
BAE said it would pay $88 a share for Armor Holdings, which makes military vehicles and bullet-proof vests.
Europe's biggest defence firm has been looking to expand in the key US market, where the firm has several lucrative contracts with the US government.
BAE recently announced a jump in pre-tax profits to £859m in 2006, from £557m the year before.
The company bought US firm United Defense Industries two years ago for £2.1bn.
BAE said it hoped to complete the takeover of Armor Holdings later this year, subject to shareholder approval and competition approval.
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