On the heels of United Technologies’ deal with Rockwell Collins, US defence contractor Northrop Grumman has announced plans to buy Orbital ATK.
Deal-making in the American aerospace and defence sector is at an all-time high this year, with mergers totalling more than $40 billion so far. The United Technologies deal alone, under which the conglomerate would acquire avionics and interiors maker Rockwell Collins, is worth $30 billion. Northrop Grumman, one of the world’s largest defence companies, is set to acquire aerospace manufacturer Orbital ATK. This deal, worth approximately $7.8 billion, is expected to close in the first half of 2018.
The Orbital ATK deal, Northrop Grumman’s largest acquisition in 15 years, will enable it to expand its store of missile defence systems and rockets, and also give it greater access to government contracts. Orbital holds contracts with NASA and the US Army; it is also one of only two firms under contract by NASA to fly cargo to the International Space Station.
While Northrop already has a significant presence in payloads, said analyst Robert Stallard of Vertical Research Partners, it has not had launcher capability, which Orbital brings for both space and missile defence. And given Orbital’s specialties in the aerospace sector, the acquisition will also help Northrop Grumman sharpen its focus on small space systems, launch vehicles, missiles and munitions, Reuters reports.
Demand for missiles is expected to rise in the near future, as the US implements plans to enhance its ballistic systems. Further, as part of a plan to modernise its atomic weaponry, the US Air Force has requested proposals for nuclear missiles and a new intercontinental ballistic missile system. The Air Force awarded Northrop Grumman a contract to advance missile technology in August. The company’s other businesses, including aerospace and mission systems and technology services, engineer and manufacture aircraft, electronic warfare systems and network defence services.