LONDON, UK / ACCESSWIRE / September 20, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for Northrop Grumman Corp. (NYSE: NOC) ("Northrop"), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=NOC. The Company announced on September 18, 2017, that it has signed an agreement to acquire Orbital ATK, Inc. (NYSE: OA). The cash plus debt transaction is valued at approximately $9.2 billion. The acquisition will allow Northrop to expand its capabilities in the area of space, missiles, and missile defense systems. For immediate access to our complimentary reports, including today's coverage, register for free now at:

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Details of the Acquisition

Northrop's purchase price of $9.2 billion for Orbital ATK includes $7.8 billion in cash and the assumption of nearly $1.4 billion in net debt. Northrop has agreed to pay Orbital ATK's shareholders $134.50 for each Orbital ATK's share they hold. The offer price represents a 20.18% premium of Orbital ATK's closing share price on September 15, 2017, the last trading day before the deal was announced. The Boards of Directors of both Companies have approved the transaction. The deal is expected to close in H1 2018 and is subject to regulatory and shareholders' approvals and other closing conditions.

Once the transaction is completed, Orbital ATK will be established as the fourth business vertical of Northrop. The other three business verticals of Northrop are Aerospace Systems; Mission Systems; and Technology Services. The establishment of Orbital ATK as a separate business vertical will be a smooth transition as well as focus on improving operating performance.

The acquisition will allow Northrop to increase its sales in FY17 in the range of $29.5 billion to $30 billion on a pro-forma basis and based on current guidance. Northrop expects that the deal would be accretive to its cash flows and EPS within the first year of the closing of the deal. The acquisition is expected to result in pre-tax cost savings of $150 million annually by the year 2020.

Northrop has put in place the necessary funding for the acquisition and has received commitments for debt financing and expects to arrange for permanent financing before the close of the transaction. Northrop is confident that it would be able to maintain solid investment grade credit rating and would be using its strong cash flows to pay off the debts, payment of competitive dividends, and support its share repurchase program.

Commenting on the acquisition, Wes Bush, Chairman, CEO and President of Northrop said:

"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. 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."

David Thompson, President and CEO of Orbital ATK, added:

"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. Our employees will also benefit from greater development and career opportunities as members of a larger, more diverse aerospace and defense enterprise."

Significance of the deal

The Northrop/Orbital ATK deal is the second largest deal in the aerospace and defense sector. It also comes in the wake of the acquisition of Rockwell Collins Inc. by United Technologies Corp. on September 04, 2017, for $30 billion. Interestingly Orbital ATK is the result of the merger between Orbital Sciences Corp. and the Aerospace and Defense groups of Alliant Techsystems Inc. in 2015. The deal gains prominence in the light of the increasing threat from North Korea, which is developing and testing nuclear weapons. One of Orbital ATK's expertise is in the area of robust missile and missile defense systems. Orbital ATK also has considerable expertise in space and rocket technology and has been ferrying cargo to the International Space Station for NASA and also has a contract with Elon Musk's Company SpaceX. The deal will allow Northrop to strengthen capabilities in military aircraft technology and missile defense systems as well as build the Company's space offerings using Orbital's satellites and advanced aerospace structures.

About Northrop Grumman Corp.

Falls Church Virginia based Northrop Grumman is a leading global security Company providing innovative systems, products, and solutions to government and commercial customers worldwide. It offers an extraordinary portfolio of capabilities and technologies including Autonomous Systems, Cyber, C4ISR, Strike, Logistics & Modernization.

Northrop's sales for FY16 were approximately $24.5 billion and had a contract backlog of approximately $45.3 billion as on December 31, 2016. The Company has over 67,000 employees.

About Orbital ATK

Dulles, Virginia based Orbital ATK is a global leader in aerospace and defense technologies. The Company designs, builds and delivers space, defense and aviation-related systems to customers around the world both as a prime contractor and as a merchant supplier. The Company has three main business verticals - Flight Systems Group; Defense Systems Group; and Space Systems Group. The Company's comprehensive product portfolio includes launch vehicles and related propulsion systems, satellites and associated components and services, composite aerospace structures, tactical missiles, subsystems and defense electronics, and precision weapons, armament systems, and ammunition. The Company has over 13,000 employees which include 4,500 engineers and scientists, 7,500 manufacturing and operations specialists, and 1,000 management and administration personnel.

Orbital ATK has approximately $4.5 billion in annual revenues and has a contract backlog of approximately $15 billion.

Last Close Stock Review

Northrop Grumman's share price finished yesterday's trading session at $278.33, slightly up 0.86%. A total volume of 1.41 million shares have exchanged hands, which was higher than the 3-month average volume of 632.57 thousand shares. The Company's stock price soared 6.98% in the last three months, 16.11% in the past six months, and 31.81% in the previous twelve months. Additionally, the stock rallied 19.67% since the start of the year. Shares of the Company have a PE ratio of 21.26 and have a dividend yield of 1.44%. The stock currently has a market cap of $48.57 billion.

At the closing bell, on Tuesday, September 19, 2017, Orbital ATK's stock marginally climbed 0.13%, ending the trading session at $132.42. A total volume of 2.87 million shares have exchanged hands, which was higher than the 3-month average volume of 359.29 thousand shares. The Company's stock price skyrocketed 31.41% in the last three months, 33.38% in the past six months, and 81.52% in the previous twelve months. Moreover, the stock soared 50.94% since the start of the year. The stock is trading at a PE ratio of 27.48 and has a dividend yield of 0.97%. The stock currently has a market cap of $7.51 billion.

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