Northrop Grumman Corp. (NYSE: NOC) announced on Monday that it will acquire Orbital ATK Inc. (NYSE: OA) for $7.8 billion in cash, as well assumption of the $1.4 billion net debt, totaling $9.2 billion. Both companies boards have unanimously approved the agreement and acquisition.
Through the agreement terms, Orbital ATK shareholders will receive all-cash consideration of $134.50 per share. Orbital ATK closed on Friday at $111.04, causing Orbital’s shares to jump over 20 percent on early morning Monday.
“The acquisition of Orbital ATK is an exciting strategic step as we continue to invest for profitable growth. Through our combination, customers will benefit from expanded capabilities, accelerated innovation and greater competition in critical global security domains. 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,” said Wes Bush, chairman, CEO and President of Northrop Grumman.
The companies merger comes shortly after United Technologies and Rockwell Collins merger announcement earlier in September. The two companies were already in the works of advancing their technologies as global tensions arise due to countries like North Korea. The merger will combine both companies efforts to develop state of the art defense systems.
Northrop is already one the largest suppliers in defense technologies, as it already supplies the U.S. military. The company is also currently in the works of developing a B-12 long range bomber.
Orbital ATK was formed in 2015 as a merger agreement between Alliant Techsystems and Orbital Sciences. The company manufactures defense and aerospace related systems as well. Orbital ATK reported revenue of $4.5 billion in the 2016 fiscal year. The company has closed over $15 billion in contracts.
The merger of the two companies will expand upon both of their developments and technologies to supply contractors with the appropriate weaponry. It will also place Orbital as the new fourth business sector.
The deal is expected to close in 2018.