Defense giant Northrop Grumman Corporation will buy Orbital ATK, Inc. for approximately $7.8 billion in cash, plus the assumption of $1.4 billion in debt.
Orbital ATK has a site in Elkton, MD that employs hundreds of people and produces rocket motors.
Orbital ATK is the product of many mergers a of rocket companies that included Morton Thiokol, which operated the Elkton site for many years.
The former Hercules Incorporated, which was based in Delaware, also had a rocket operation for many years in Utah that later became part of Orbital ATK.
The defense and aerospace industry continues to see a wave of mergers amid signs that anti-missiles will become a top priority in dealing with the nuclear warhead threat from North Korea and its mercurial leader.
Orbital ATK stock had been trading at about $73 a year ago rocketed from less than $110 a share a week ago to more than $130 with the merger announcement.
“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. 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. Our employees will also benefit from greater development and career opportunities as members of a larger, more diverse aerospace and defense enterprise. We will remain focused on operational excellence and execution during and after the transition into Northrop Grumman,” said David Thompson, CEO of Orbital ATK.
Upon completion of the acquisition, Northrop Grumman plans to establish Orbital ATK as a new, fourth business sector.
Northrop Grumman has received fully committed debt financing and expects to put in place permanent financing prior to closing. Northrop Grumman remains committed to maintaining a solid investment grade credit rating and will use its strong cash flow to support debt reduction while continuing to pay a competitive dividend and repurchase shares.
