Northrop Offers Concessions for Newport, Sources Say

Northrop Grumman Corp. offered to share U.S. Navy contracts with General Dynamics Inc. if Northrop’s bid for Newport News Shipbuilding Inc. wins regulatory approval, sources familiar with the plan said Wednesday.

The companies, both trying to buy Newport News for $2.6 billion, are contractors on Navy ships and submarines. Northrop thinks the proposal would give the Pentagon the cost savings it seeks while preserving competition.

Pentagon officials are about to give their approval to the bid from General Dynamics, maker of the M1A1 Abrams tank, because the potential savings outweigh the competition issue, sources familiar with its review said. Newport News shareholders have tendered a majority of their stock to General Dynamics’ offer. The Pentagon’s review may be submitted to the Justice Department, which gives final approval, as early as this week, sources said.

Northrop spokesman Randy Belote said the company hasn’t been told that Pentagon officials are favoring General Dynamics’ bid. He declined to comment on whether there was a proposal to share work with General Dynamics. Newport News spokeswoman Jerri Dickseski declined to comment, as did General Dynamics spokesman Kendell Pease and Pentagon spokesman Glenn Flood. The Wall Street Journal reported Wednesday that Pentagon officials are backing General Dynamics’ takeover.

Shares of Los Angeles-based Northrop have fallen 9.2% since May 8, the day before it made the unsolicited bid for Newport News.

In New York Stock Exchange trading, Northrop shares fell 45 cents to close at $83, and General Dynamics shares lost $1.13 to close at $80.33.