Under the deal, BAE was to produce 495 lightweight, 155-millimetre guns over the next four years, the group said.

The deal would further strengthen BAE's position in the US defence market.

BAE Systems said earlier this month it was to buy US rival United Defence Industries (UDI), manufacturer of the Bradley Fighting Vehicle, for 3.97 billion dollars.

UDI makes combat vehicles and munitions, as well as carrying out naval ship repairs.