The land systems business designs and build mine-protected vehicles, turret systems and drive trains.
Bieber said the land systems operation will benefit from Denel's complementary product lines and its close association with the South African government.
Completion of the deal comes hard on the heels of last week's announcement that BAE's US business had appointed advisers to consider the sale of the $1.75 billion-turnover manpower and services elements of its intelligence and security sector.
Divestitures by the US business of BAE in recent years have included the sale of its Safariland protective clothing and body armour business for $124 million.
Smaller deals include a $10 million sale of commercial armoured vehicle activities to the O'Gara Group and the disposal of a small unmanned air vehicle business.