WASHINGTON — Northrop Grumman will acquire Orbital ATK in a $9.2 billion deal the companies announced Sept. 18.
Under the terms of the deal, Northrop Grumman will pay $7.8 billion in cash and assume $1.4 billion in debt to acquire Orbital ATK. Northrop Grumman is paying $134.50 per share of Orbital ATK stock, a premium of more than 20 percent over the stock’s price of $110 per share at the close of trading Sept. 15. News of the deal was first reported Sept. 17 by the Wall Street Journal.
The companies, in a statement announcing the deal, described Northrop’s acquisition of Orbital as a complementary one. Orbital ATK will operate as a fourth division of Northrop Grumman, alongside aerospace systems, mission systems and technology services. [Launch Photos: Orbital ATK's Upgraded Antares Rocket Returns to Flight]
"Through our combination, customers will benefit from expanded capabilities, accelerated innovation and greater competition in critical global security domains," Wes Bush, chairman and chief executive of Northrop Grumman, said in a statement announcing the deal. "Our complementary portfolios and technology-focused cultures will yield significant value creation through revenue synergies associated with new opportunities, cost savings, operational synergies, and enhanced growth."
"We are very pleased to announce this agreement with Northrop Grumman. It reflects the tremendous value Orbital ATK has generated for our customers, shareholders and employees," said David Thompson, president and chief executive of Orbital ATK, in the same statement. "The unique alignment in culture and mission offered by this transaction will allow us to maintain strong operational performance on existing programs while we pursue new opportunities that require the enhanced technical and financial resources of a larger organization."
An Orbital ATK investor presentation released by the company also emphasized the complementary nature of the deal. It noted that Orbital ATK has expertise in launch vehicles, smaller satellites, propulsion systems and some military programs that Northrop Grumman lacks. Northrop, by comparison, has capabilities in other areas, including larger satellites, that Orbital ATK does not have.
The acquisition by Northrop Grumman would give Orbital ATK greater technical and financial resources to pursue larger programs, the presentation noted. That includes ongoing efforts by Orbital to develop a satellite servicing system as well as a proposed large launch vehicle.
The announcement made no mention of consolidations typical with such deals, such as the closure of redundant facilities or layoffs of employees. The companies expect the deal to close in the first half of 2018 after approval by Orbital ATK shareholders and regulatory reviews.
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