Northrop to Buy Defense Software Company

Northrop Grumman Corp., returning quickly to the acquisition strategy that preceded its ill-fated merger deal with Lockheed Martin Corp., said Monday that it will buy a defense software company for $55 million in cash.

The Los Angeles-based aerospace company said it will buy privately held Inter-National Research Institute, a Reston, Va.-based company with 500 employees and about $60 million in revenue expected for 1998.

INRI develops software used by the Pentagon and its suppliers for command and control, tracking, data infusion and mapping applications.

Once the acquisition is complete, INRI will remain an independent operation, but will be part of Northrop Grumman’s Logicon subsidiary, which recently moved its headquarters to Herndon, Va.

The deal comes just weeks after Lockheed Martin dropped plans to buy Northrop Grumman in a stock deal worth $10.7 billion. The merger collapsed after the companies could not resolve antitrust concerns raised by the federal government.

But Northrop is not waiting for a new marriage partner. Kent Kresa, the company’s chairman, president and chief executive, is plowing ahead with plans to build up its strong defense electronics business and its fast-growing information systems group.

Northrop, once known exclusively for its production of the B-2 bomber, doubled its information technology business to $1 billion in sales last year with the purchase of Logicon. The company expects to double the business again by 2002.

“The acquisition of INRI will solidly position Northrop Grumman in the forefront of the Defense Department’s expanding defense information infrastructure efforts,” Kresa said in a statement.

Although Kresa is working to dispel the notion that Northrop cannot be a major Pentagon player without a new suitor, Wall Street seems unconvinced--and it shows in the company’s stock price.

Northrop’s shares, which hit a 52-week low Aug. 6, closed at $73.69, down $3 on the New York Stock Exchange.