Northrop Grumman Corp.'s $7.8 billion purchase of Orbital ATK Inc. will expand its space and missile businesses just as the U.S. sharpens its focus on defending against a possible strike by North Korea.
The transaction cements a turnaround for Northrop, which had been the target of breakup speculation before it scored an upset win in 2015 to build the next U.S. stealth bomber. The combined company would be firmly positioned as one of the four largest U.S. defense contractors, with about half of roughly $29 billion in sales last year having come from Pentagon prime contracts.
The cash offer represents a 22 percent premium over Orbital's closing price last week, and it ranks as the largest defense deal since Lockheed bought the Sikorsky helicopter division of United Technologies Corp. in 2015. U.S. defense companies have soared this year on prospects for greater weapons spending under President Donald Trump and from governments overseas, amid rising perceived threats.
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