Northrop Grumman to Buy Orbital ATK for $7.8 Billion
By Dana Mattioli and Doug Cameron
Northrop Grumman Corp. on Monday said it agreed to buy fellow defense contractor Orbital ATK Inc. for $7.8 billion in cash, as acquisition activity in the aerospace industry ramps up.
Northrop agreed to pay $134.50 a share for Orbital, a roughly 22% premium to Friday's closing price of $110.04 on Friday. Including $1.4 billion in assumed debt, the deal carries a total price tag of about $9.2 billion.
The deal follows another big aerospace union announced earlier this month when United Technologies Corp. agreed to buy Rockwell Collins Inc. for about $23 billion.
A purchase of Orbital would add to Northrop Grumman's existing focus on military aircraft and space systems, expanding the franchise to include more fast-growing missile-defense business.
Orbital provides space rocket motors and other parts for offensive and defensive missile systems, as well as satellites for military and commercial space operations. It was formed in 2015 from the merger of two missile and space specialists, Alliant Techsystems and Orbital Sciences. Orbital ATK employs about 13,000 and is targeting sales this year of $4.6 billion.
Its role in space and missile systems has led some analysts to view the company as a potential takeover target for big customers such as Boeing Co., Lockheed Martin Corp. or Northrop.
Northrop, which beat out Boeing and Lockheed to build the new B-21 Raider long-range bomber, is also competing to build a new fleet of intercontinental ballistic missiles for the U.S.
Northrop is vying with Boeing for the Ground-Based Strategic Deterrent nuclear missile program and has joined with Orbital and fellow rocket maker Aerojet Rocketdyne Inc. during the current development phase of the $80 billion program.