US-based aerospace and defense manufacturer Northrop Grumman last week announced plans for a multi-billion dollar acquisition of Orbital ATK.
In a further consolidation of the US aerospace manufacturing sector, Northrop Grumman will buy Orbital for a total of $7.8bn and will assume $1.4bn in net debt.
Both companies manufacture a wide range of aerospace equipment, seen as key both for a resurgent space industry as well as missile defense.
Northrop is well-known for its bombers, missiles, and drones which are already deeply integrated into the US military, something which will only be furthered by its winning of the contract to produce the next-generation B-21 bomber, expected to be worth up to $80bn for the company.
As well the company produces large satellites, and such as the hugely-expensive James-Webb Telescope, expected to be launched next year.
For its part, Orbital ATK, focuses primarily on smaller and medium-sized satellite manufacturing, as well as space launch capabilities.
Despite setbacks related to its Antares rocket, which faced a catastrophic failure in 2014, the company has managed to increase its profit margin in recent years.
It is likely that Northrop Grumman, seeing the growing potential for the space launch businesses, decided to buy Orbital in order to fill this gap in its aerospace portfolio.
As well, tensions with North Korea have driven a renewed focus on missile defense, and new contracts in this area. Orbital’s solid and liquid fuelled rocket expertise would certainly help Northrop win more of these lucrative government deals.
“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,” said Wes Bush, CEO of Northrop Grumman.
“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.”
The deal itself is expected to be completed during the first-half of 2018, subject to approval by US regulatory bodies.
Once the deal has gone ahead, Northrop has stated that it expects that Orbital ATK will continue as a “fourth business sector’ within its larger company.