Northrop Grumman Corporation, the US defence and aerospace company, is acquiring Orbital ATK (OATK) for US$9.2 billion. The completion of the deal will see OATK established as the fourth major Northrop Grumman business unit alongside Aerospace Systems, Mission Systems and Technology Services.
The US$9.2 billion value is reportedly to be made up of US$7.8 billion cash payments coupled with the assumption of US$1.4 billion in net debt. Current OATK shareholders are expected to receive around US$134.50 per share. It is unknown whether current Orbital ATK President and CEO David W. Thompson, will have a position in the company’s new form.
Comment by David Todd: Northrop Grumman’s acquisition of Orbital ATK makes sense because it fills in the gaps in the corporation’s product line. Orbital ATK has strength in launch vehicles and solid rocket missile technology (important given a likely revamp of US ballistic and anti-ballistic missile systems), while also offering the “Star” small-to-medium satellite line. While Northrop Grumman has been partially successful in gaining US government military aircraft contracts – it recently won the B-21 competition to build a stealthy strategic bomber replacement for the B-1B and B-52 but it has not won a fighter or trainer competition since the 1970s (although it has a share in the Lockheed Martin-led F-35 programme). As such, it remains a very much smaller corporation compared to its main competitors Boeing and Lockheed Martin. This move at least stops Boeing or Lockheed Martin getting Orbital ATK first and gives Northrop Grumman the size to compete against its larger competitors.