Northrop Grumman Corp. to buy Litton Industries Inc. for 0.68 times revenue, The

Weekly Corporate Growth Report, Jan 8, 2001

The Deal: The Northrop Grumman Corp. has agreed to purchase Litton Industries Inc. for $3.8 billion. The acquisition gives Grumman's defense-electronics and information-systems operations a boost and also launches it into the shipbuilding business. According to the terms of the deal, Grumman will also assume $1.3 billion in Litton debt.

Discussion: Litton Industries Inc.'s information-systems operations include computer systems integration, and its advanced-electronics unit makes navigation, guidance and control systems, along with electronic warfare systems. Litton's ship systems operations builds ships for the United States Navy; its electronic components and materials division makes connectors, circuit boards and other commercial electronic components. The United States Government accounts for about two-thirds of the company's sales.

The Northrop Grumman Corp. is a United States leader in the aerospace and defense industries. The company operates integrated systems and aerostructures, electronics and information technology segments. It makes Joint STARS battlefield surveillance systems and AWACS radar for the United States Air Force. Northrop Grumman has sold its commercial aerostructures unit to Carlyle, but is keeping its military aerostructures business. It also supplies upgrades and maintenance for the United States Air Force's B-2 Stealth bombers. The company's Logicon subsidiary provides computer and information systems for the United States government and the private sector.