Northrop Grumman Corp. to buy Orbital ATK for $134.50 a share

Northrop Grumman (NOC) and Orbital ATK (OA) announced they have entered into a definitive agreement under which Northrop Grumman will acquire Orbital ATK for approximately $7.8B in cash, plus the assumption of $1.4B in net debt.

Orbital ATK shareholders will receive all-cash consideration of $134.50 per share.

The agreement has been approved unanimously by the boards of both companies. The transaction is expected to close in the first half of 2018 and is subject to customary closing conditions, including regulatory and Orbital ATK shareholder approval.

Upon completion of the acquisition, Northrop Grumman plans to establish Orbital ATK as a new, fourth business sector to ensure a strong focus on operating performance and a smooth transition into Northrop Grumman.

On a pro forma 2017 basis, Northrop Grumman expects to have sales in the range of $29.5B-$30B based on current guidance.

Northrop Grumman expects the transaction to be accretive to earnings per share and free cash flow per share in the first full year after the transaction closes, and to generate estimated annual pre-tax cost savings of $150M by 2020.

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.

STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners.

This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.