British military contractor BAE Systems says it will buy its U.S.-based rival, United Defense Industries, for nearly $4 billion in cash.

The British firm's American subsidiary, BAE Systems North America, also will assume more than $200 million of debt from United Defense Industries, raising the total price of the acquisition to nearly $4.2 billion.

Corporate officials in London say they expect the combined company will benefit from the U.S. military's war on terrorism and ongoing military operations in Afghanistan and Iraq.

United Defense Industries designs and manufactures armored vehicles, artillery systems, naval guns and missile launchers for the United States and other nations. Its sales last year brought in over $2 billion.

BAE, one of Europe's biggest defense contractors, also owns a stake in aircraft maker Airbus.

Some information for this report provided by AFP and Reuters.