Litton Abandons Bid for Newport News

Litton Industries Inc. scrapped its $1.3-billion offer to buy Newport News Shipbuilding Inc. because of strong opposition from the Pentagon. But Litton said it is proceeding with plans to buy a smaller shipbuilder, Avondale Industries Inc., for about $525 million. The decision to abandon the Newport News purchase was not a surprise, because the Defense Department had made it clear in late May that it would move to block the merger. Defense officials were concerned that the buyout--which would have made Woodland Hills-based Litton the largest U.S. naval shipbuilder--also would have left the Navy with too few suppliers, irrespective of any cost savings the merger would have generated. Litton’s shares fell 44 cents, closing at $72 on the NYSE.