Northrop deepens space-defense push on Orbital deal

Northrop Grumman Corp.'s $7.8 billion purchase of Orbital ATK Inc. will expand its space and missile businesses just as the United States 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.

'As we watch what's happening around our globe, the rather rapid advance of some of our potential adversaries is quite concerning,” Northrop CEO Wesley Bush said Monday on a conference call with analysts to discuss the transaction. 'This issue of technological superiority for the U.S. and our allies is a real issue. It's something that our customers are struggling with.”

The tie-up extends the broad reshuffling of the aerospace industry after United Technologies said this month that it will buy Cedar Rapids-based Rockwell Collins for $23 billion.