In a news release, the launch vehicles and satellites maker, Orbital Sciences Corp, has announced that it has entered a agreement to merge with the solid rocket manufacturer, Alliant Techsystems Inc. (ATK). Orbital and ATK’s Aerospace and Defense (A&D) Groups will combine to create a $4.5 billion revenue group, to be called Orbital ATK Inc., with a human resource of over 13,000 individuals. As part of the transaction, ATK will spin off its Sporting Group, which focuses on commercial sporting equipment, to its shareholders.
The tax-free stock-for-stock merger-of-equals transaction, valued at approximately $5.0 billion based on Orbital’s closing stock price of 28 April, will combine Orbital’s small- and medium-class satellite and launch vehicle product lines with ATK A&D’s rocket propulsion, composite structures and space power systems. A 16-member Board of Directors will be led by Chairman Gen. Ronald R. Fogleman (U.S. Air Force, ret.) and will include seven directors from ATK’s Board and nine directors from Orbital’s Board.
Mr. David W. Thompson, Orbital’s President and Chief Executive Officer, will be President and Chief Executive Officer of the new company; Mr. Blake E. Larson, President of ATK’s Aerospace Group, will serve as its Chief Operating Officer; and Mr. Garrett E. Pierce, Orbital’s Chief Financial Officer, will hold the same position in the new company.
In the merger, ATK shareholders will own approximately 53.8% of the equity of the combined company and Orbital shareholders will own approximately 46.2%. The combination, which has been unanimously approved by the Boards of both companies, is to be effected in a tax-free “Morris Trust” transaction structure, with a spin-off of ATK’s Sporting Group to its shareholders immediately prior to the merger.
Comment by David Todd: At first sight, this merger makes sense for ATK more than it does for Orbital Sciences Corp. While it had moved into satellite manufacture in a small way, ATK’s main solid rocket product line had limitations for its growth potential and it makes sense for ATK to further diversify its space and defence portfolio. However, it could be argued that Orbital Sciences Corp had already done its own diversification. It wisely moved away from being just a launch vehicle constructor (it makes the solid rocket based Pegasus and Taurus, and more recently the liquid fuel Antares launch vehicle) into becoming a major commercial spacecraft constructor. Orbital Sciences does however note that the new pairing will allow some cost savings on the Orbital Sciences launch vehicle front as the new firm will be able to manufacture solid rocket stages in house rather than have them (expensively) supplied by an external contractor.
Another benefit of the merger is that perhaps the new larger company of Orbital ATK will now be able to compete more effectively with the likes of Boeing, Lockheed Martin and Northrop Grumman.
One final thing: this is almost a romantic happy ending to a tale of past broken hearts. Noted Space News writer Peter B. de Selding more or less notes in his twitter feed that the “marriage” occurred after each firm had their previous “engagements” broken. ATK attempted to buy MDA but this was prevented from doing so by the Canadian Government, while Orbital Sciences wanted to buy Space Systems/Loral but that went to MDA. It has all turned out happily in the end as lonely hearts Orbital Sciences and ATK have now got together. We wish the couple every happiness in their future together…aaahhh. 🙂