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UPDATE 3-Northrop Grumman to buy missile maker Orbital for $7.8 bln

UPDATE 3-Northrop Grumman to buy missile maker Orbital for $7.8 bln
From Reuters - September 18, 2017

(Reuters) - U.S. defense contractor Northrop Grumman Corp (NOC.N) said on Monday it would buy Orbital ATK Inc (OA.N) for about $7.8 billion, getting access to lucrative government contracts and expanding its arsenal of missile defense systems and space rockets.

The all-cash deal comes as North Korea tests threatening missiles and nuclear weapons, heightening tensions with the United States and its allies.

Clearly, as we watch whats happening around our globe, the rather rapid advance of some of our potential adversaries is quite concerning, Northrop Chief Executive Wes Bush said on a call with analysts.

Although Northrop already has a significant presence in payloads, it has not had launcher capability, an area that Orbital brings for both space and missile defense, Vertical Research Partners analyst Robert Stallard said on Monday.

Orbital has contracts with NASA and the U.S. Army. The Dulles, Virginia-based company is one of the two firms hired by NASA to fly cargo to the International Space Station under an initial contract worth up to $3.1 billion.

Northrops purchase of Orbital would help sharpen its focus on small space systems, launch vehicles, missiles and munitions.

The deal also comes ahead of planned upgrades of U.S. ballistic systems, which are expected to drive demand for missiles, potentially benefiting companies such as Northrop.

The Air Force last summer called for proposals to replace its aging nuclear missiles and intercontinental ballistic missile system as the military moves ahead with a costly modernization of its atomic weapons.

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