Northrop Grumman Makes $9.2B Deal To Purchase Orbital

By Linda Cicoira — Orbital ATK Inc., the company that launches rockets from Wallops Island to the International Space Station (ISS), is being sold to Northrop Grumman Corp. for $9.2 billion, the two companies announced this week. 

The next local launch is slated for just after 8 a.m., Nov. 10. It is the ninth Cygnus cargo freighter on the eighth operational cargo delivery flight to the ISS. The mission is known as OA-8. It will fly in the Antares 230 with two RD-181 first stage engines and a Castor 30XL second stage. Crew supplies and science experiments will be among the several tons of items transported.

The agreement with Northrop Grumman was broken down to $7.8 billion in cash, plus the assumption of $1.4 billion in net debt. “Orbital shareholders will receive all-cash consideration of $134.50 per share.” The agreement was approved unanimously by the boards of directors of both companies. Closing was set for 2018 and is subject to conditions, including regulatory and Orbital shareholder approval.

“The acquisition of Orbital ATK is an exciting strategic step as we continue to invest for profitable growth,” said Wes Bush, chairman, chief executive officer and president of Northrop Grumman. “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. We look forward to welcoming Orbital ATK’s talented employees to Northrop Grumman, and believe our combined strength will benefit our customers and shareholders.”

The company is expecting an estimated annual cost savings of $150 million by 2020. It expects to have sales in the range of $29.5 to $30 billion based on current guidance.

David Thompson, president and chief executive officer of Orbital, said the agreement reflects the company’s value that has been 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,” he continued. “Our employees will also benefit from greater development and career opportunities as members of a larger, more diverse aerospace and defense enterprise.”

The Ionospheric Connection Explorer (ICON) is scheduled to study the frontier of space described as “the dynamic zone high in our atmosphere where Earth weather and space weather meet,” with a launch from Kwajalein Atoll in the Republic of the Marshall Islands, aboard an Orbital ATK Pegasus, on Dec. 8, 2017.

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