Northrop to Buy Litton for $3.8 Billion
L O S A N G E L E S, Dec. 22 -- One of the nation’s largest defensecontractors — building everything from airplanes to Navy destroyers— could be formed if a merger between Northrop Grumman and Litton Industries is approved.
Northrop said Thursday it will buy Litton for $3.8 billion incash. The company will also assume $1.3 billion in Litton debt.
Company leaders are optimistic they’ll get approval for thedeal, saying it could be consummated by the first quarter of 2001.
Servicing the U.S. MilitaryThe combined companies will create products for virtually everybranch of the U.S. military, including destroyers, planes andelectronics.
Under the deal, Northrop Grumman will pay $80 per Litton commonshare. If approved by regulators, the combined company will have $15billion in revenues in 2001, growing to $18 billion by 2003, thecompanies estimated.
The combined company would have approximately 79,000 employees,although Northrop Grumman chairman and chief executive officer KentKresa said there would be some layoffs, particularly as thecompanies consolidate their headquarters.
Northrop Grumman makes weapons systems, including radar andnavigation systems. Litton Industries builds non-nuclear ships forthe Navy and provides advanced information technology forcommercial and defense customers. Both companies are based in LosAngeles.
The Savings PlanThe companies said they expect to save more than $250 millionover the next few years as a result of the deal, including $100million in the first year following the transaction.
“Some of it is in people reduction, particularly at theheadquarters,” Kresa said. “This is a growing corporation. Wehave need for people. I can’t speak to layoffs. We would hope thereare good people who are flexible and can move into other areas.”
The companies said they expect the transaction to close sometimein the first quarter.
Company executives said informal talks had been ongoing foryears, but that the two firms signed a confidentiality agreementand pursued a deal in earnest in June.
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