Economy

Northrop Close to Reaching Deal to Acquire Orbital ATK

Northrop Close to Reaching Deal to Acquire Orbital ATK”

USA defense group Northrop Grumman is poised to buy out smaller rival Orbital ATK in a deal worth $7.5 billion, according to the Wall Street Journal.

Northrop will assume $1.4 billion in Orbital's net debt as part of the deal, the companies said. Orbital shareholders will $134.50 per share in cash, which represents a 22% upside to the stock's Friday closing price of $110.04. Through our combination, customers will benefit from expanded capabilities, accelerated innovation and greater competition in critical global security domains.

Upon completion of the acquisition, Northrop Grumman plans to establish Orbital ATK as a new, fourth business sector to ensure a strong focus on operating performance and a smooth transition into Northrop Grumman. It was formed in 2015 from the merger of two missile and space specialists, Alliant Techsystems and Orbital Sciences.

Orbital ATK's 2016 financials noted the Dulles, Virginia-based aerospace and defense contractor has contracts with the U.S. Army and NASA and Reuters added such contracts would provide Northrop annual revenue worth more than $4.4 billion.

Orbital's shares were trading at $131.70 before the bell. Year-to-date, NOC has gained 16.11%, versus a 12.51% rise in the benchmark S&P 500 index during the same period.



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