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Defense contractor Northrop Grumman to acquire Orbital ATK for $7.8 billion


Northrop Grumman has reached a deal to acquire fellow defense contractor Orbital ATK for about $7.8 billion.

Falls Church, Va.-based Northrop Grumman said Monday it had identified "significant" opportunities for revenue growth, cost cuts and more efficient operations by adding Dulles, Va.-based Orbital.

Annual pre-tax cost savings will total $150 million by 2020, Northrup Grumman estimated.

Northrop Grumman's products and services include missile systems, drones and cyber defense technology. Orbital's lineup includes launch systems, defense electronics and satellites. 

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“The acquisition of Orbital ATK is an exciting strategic step as we continue to invest for profitable growth," Northrop Grumman CEO Wes Bush said in a statement. "Through our combination, customers will benefit from expanded capabilities, accelerated innovation and greater competition in critical global security domains."

Northrop Grumman will pay $134.50 per share for Orbital, representing about $7.8 billion in cash and the assumption of $1.4 billion in net debt.

The deal is expected to close in the first half of 2018.

Northrop Grumman had about 67,000 employees as of Dec. 31. Orbital had about 12,700.

Orbital stock rose 19.5% to $131.51 in pre-market trading. Pre-market trading on Northrop Grumman shares had not yet begun.

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Follow Paste BN reporter Nathan Bomey on Twitter @NathanBomey.