U.S. defense contractor Northrop Grumman Corp (NOC.N) said on Monday it would buy Orbital ATK Inc (OA.N) for about $7.8 billion in a deal that gives it greater access to lucrative government contracts and expands its arsenal of missile defense systems and space rockets.
The all-cash transaction is the biggest in the defense sector in two years and comes as North Korea’s missile and nuclear weapons threats grow, heightening tensions with the United States and its allies.
“Clearly, as we watch what’s happening around our globe, the rather rapid advance of some of our potential adversaries is quite concerning,” Northrop Chief Executive Wes Bush said on a call with analysts.
Although Northrop already has a significant presence in payloads, it has not had launcher capability, an area that Orbital brings for both space and missile defense, Vertical Research Partners analyst Robert Stallard said on Monday.
Orbital has contracts with NASA and the U.S. Army. The Dulles, Virginia-based company is one of the two firms hired by NASA to fly cargo to the International Space Station under an initial contract worth up to $3.1 billion.
