Northrop Grumman Corp., a U.S. based aerospace & defense tech firm, has finally received a green signal from the U.S. antitrust division for the acquisition of Orbital ATK Inc., another reputed aerospace & defense firm operating in U.S. If sources are to be believed, the deal is currently worth a valuation of USD 7.8 billion.
The Federal Trade Commission (FTC) has declared that the approval of agreement is based on two conditions. The first condition apparently states that Northrop must supply solid rocket motors to its business rivals for missile contracts. The second condition emphasizes that the business operations of both the firms should be separated via a firewall.
Earlier in February this year, the European Commission had sanctioned the acquisition deal. Reportedly, Northrop had announced this all-cash deal in September last year, citing that the move can help the firm acquire lucrative contracts from the U.S. government. The company even claimed that through the purchase of Orbital’s shares it can expand its space rocket & missile defense system portfolio.
Apparently, Orbital has received contracts from both, the U.S. army as well as NASA. According to USD 3.1 billion contract deal signed with NASA, Orbital has been designated the responsibility of offering cargo services to the International Space Station.
The FTC has asserted that it prefers firms selling their assets over the requirement of behavioral remedies as in this case of the merger between Northrop & Orbital. However, it has accepted this agreement since the defense industry sells goods only to the Defense department, ensuing compliance with FTC.
As per authentic reports, Northrop has projected that it will accrue overall earnings worth USD 30 billion post acquisition this year. Earlier, the firm was expecting to accrue nearly USD 27 billion with earnings per share in the range of USD 15.40 to USD 15.65.