Northrop Grumman buying Orbital ATK

Last Tuesday the U.S. Federal Trade Commission declared that it had cleared the purchase deal of worth $ 7.8 billion whereby Northrop Grumman will acquire the ownership of Orbital ATK which is the defense as well as the space contractor.

This will be Northrop Grumman’s fourth business sector, and the acquired company will be known as Northrop Grumman Innovation Systems. The other three companies that Northrop Grumman owns are Technology Services, Mission Systems, and Aerospace Systems. With the latest addition, experts feel that the gross turnover of Northrop Grumman will be around $30 billion in the current financial year. As per the agreement, the company will be required to provide solid rocket motors which will be on a non-discriminatory basis and under certain specific circumstances. The U.S. Federal Trade Commission made this statement.

Experts feel that it is very imperative to maintain proper and transparent competition in the solid rocket motors industry. Such healthy competition is very much required for the Defense Department since only two manufacturers are left in this sector, namely Orbital ATK and Aerojet Rocketdyne. The Air Force has made all the plans to purchase a new strategic intercontinental ballistic missile which is known as the Ground-Based Strategic Deterrent. Northrop Grumman and Boeing are the two companies which are fighting for the contract. As per the designs laid down by the FTC, Northrop Grumman is required to separate the solid rocket motors business with a firewall to extend its helping hands towards Boeing. Defense Department will be the final authority to decide on the compliance adherence of the firewall issue.

On September 18, Northrop Grumman declared to buy out Orbital ATK for $9.2 billion. It paid $7.8 billion in cash and the remaining through raising debt to the extent of $1.4 billion. However, both the firms have denied the fact that such merger has hardly made any reduction in the competition in the defense and the space sectors. Northrop Grumman CEO Mr. Wes Bush said that both the companies complement each other very well. Similarly, on the other hand, Orbital ATK CEO David Thompson said that such partnership would open more avenues concerning financial resources as well as technical resources than the company possesses currently.

The merger has come into effect at a correct time when both the companies are looking to expand their business with NASA for space exploration. While Orbital ATK revealed a new intermediate stage for heavy lift rockets in April, Northrop Grumman bagged a contract from the Air Force to manufacture next-generation missile-warning satellites.