U.S. defense contractor Northrop Grumman buys missile and rocket maker Orbital for about $7.8 billion in cash, giving it access to lucrative contracts with NASA and the U.S. Army. Roselle Chen reports.
U.S. defense contractor Northrop Grumman is buying missile maker Orbital for $7.8 billion. The all-cash offer represents a 22 percent premium to Orbital's Friday close. Orbital shares hit record high on the news. Northrop traded up as well. The deal comes amid tensions between the United States and North Korea, and ahead of a planned upgrade of U.S. ballistic systems. Reuters Breakingviews' Tom Buerkle says he sees a lot of synergies between the companies: (SOUNDBITE) TOM BUERKLE, EDITOR, REUTERS BREAKINGVIEWS (ENGLISH) SAYING: "I think it's a stretch to say it's just because of North Korea. It certainly doesn't hurt. You know, they set their horizon on geopolitical tensions, the fact that military space technology seems to be growing in importance, and likely to continue to do so is significant, they're also looking at growth areas." Buerkle also says he doesn't expect antitrust problems. In a similar deal earlier this month, United Technologies agreed to buy avionics maker Rockwell Collins for $30 billion.