Market Overview

Orbital ATK Up 20% On News Of Northrop Grumman Deal

Orbital ATK Up 20% On News Of Northrop Grumman Deal

Defense giant Northrop Grumman Corporation (NYSE: NOC) confirmed Monday it will buy Orbital ATK Inc (NYSE: OA), the maker of the Pegasus rocket and a vast array of other aerospace and defense systems, in a $7.2 billion deal.

Orbital shares rocketed 19.32 percent in pre-market trading to $131.30.

Orbital holders will receive $134.50 a share in cash, the companies said in a statement Monday. The price is 22 percent above the stock’s closing level Friday. Northrop also will assume $1.4 billion in net debt.

Another Move Toward Defense Industry Consolidation

“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,” Northrop Grumman CEO Wes Bush said in a press release.

On a pro forma 2017 basis, Northrop Grumman expects to have sales in the range of $30 billion, based on current guidance.

The Orbital deal adds to Northrop’s realm of products that includes rocket propulsion, missiles and munitions.

The deal comes on the heels of another big defense merger: Earlier this month, United Technologies Corporation (NYSE: UTX) said it was buying Rockwell Collins, Inc. (NYSE: COL) for $23 billion. That deal triggered anti-trust concerns, since the companies dominate the market for systems from cockpit to tail section of commercial aircraft.

Related Link: Boeing, Airbus, Analyst Question United Technologies Deal


Image Credit: By NASA - Great Images in NASA Description, Public Domain, Wikimedia Commons


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