Litton Reaches Agreement to Buy Avondale
Defense and electronics giant Litton Industries Inc. on Thursday sealed a deal to buy the shipbuilder Avondale Industries Inc. and said it would press ahead with efforts to acquire Newport News Shipbuilding Inc. despite Pentagon opposition.
Separately, Woodland Hills-based Litton reported its fiscal third-quarter profit rose 8% from a year earlier, to $50.9 million, or $1.10 per diluted share.
The news boosted Litton shares in trading on the New York Stock Exchange. Litton shares rose $2.13 to close at $69.06 on the NYSE. Avondale shares fell 13 cents to close at $38.19 on Nasdaq, and Newport News fell 63 cents to close at $28.25 on the NYSE.
Litton, which designs and builds surface combat ships for the military, launched a bid for Avondale in May that eventually reached $39.50 in cash per share, or $529 million. The bid topped a rival offer, made in January, by Newport News.
On Thursday, Newport News said it would not raise its bid for Avondale--a stock swap worth $470 million--and Avondale said it had accepted Litton’s offer.
The news ended speculation about a bidding war for Avondale, a New Orleans-based shipbuilder that makes commercial vessels and auxiliary and amphibious military vessels.
Litton’s pursuit of Virginia-based Newport News remains unresolved. In May, alongside its offer for Avondale, Litton launched an offer to buy Newport News in a stock swap valued at $1.8 billion.
Last week, the Defense Department said it would oppose a deal between Litton and Newport News on the ground that such a merger would reduce the number of companies competing to build ships for the U.S. Navy.
Just two months ago, similar Pentagon concerns quashed a proposal by General Dynamics Corp. to buy Newport News for $1.4 billion.
Newport News is the Navy’s only maker of nuclear-powered aircraft carriers. It also builds nuclear submarines.
A Litton spokesman said Thursday the company is pursuing its bid for Newport News.
“We are trying to identify all their concerns and find an amicable solution. In the meantime, we continue to talk to Newport News with the hope of reaching a definitive merger agreement,” Litton spokesman Randy Belote said.
Litton said its acquisition of Avondale would create a company with revenue of $5.5 billion and more than 40,000 employees.
