Northrop Grumman Corp. on Monday said it agreed to buy fellow defense contractor Orbital ATK Inc. for $7.8 billion in cash, as acquisition activity in the aerospace industry ramps up.

Northrop agreed to pay $134.50 a share for Orbital, a roughly 22% premium to Friday’s closing price of $110.04. Including $1.4 billion in assumed debt, the deal carries a total price tag of about $9.2 billion.

The...