Kim&A

18 September 2017 By Tom Buerkle

The drone and B2 bomber maker is going ballistic by buying missile and satellite maker Orbital. Cost savings fall short of covering the all-cash deal’s premium. But with tensions growing over North Korea’s nuclear threat, the target’s interceptor business may be set to rocket.

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Northrop Grumman said on Sept. 18 it had agreed to acquire Orbital ATK, a maker of satellites, rockets and propulsion for missile defense interceptors, for around $7.8 billion in cash plus the assumption of $1.4 billion of net debt. The military aerospace and logistics company will pay $134.50 a share for each share of Orbital, a premium of 22 percent over the closing price on Sept. 15.

The company projected annual pre-tax cost savings of $150 million a year by 2020.

Orbital will become a fourth business division alongside Northrop’s existing aerospace systems, mission systems and technology services units.

Perella Weinberg is advising Northrop Grumman on the deal. Citigroup is advising Orbital.

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