Northrop Grumman Starts Offer for Newport Shares
Northrop Grumman Corp.said Wednesday that it has started its exchange offer for shares of Newport News Shipbuilding Inc., moving forward with its hostile bid despite Newport’s planned merger with rival General Dynamics Corp.
Century City-based Northrop said it would immediately enter negotiations with Newport News if the maker of nuclear-powered aircraft carriers and submarines allows Northrop to conduct a due diligence review.
A spokeswoman for Newport News said the board would review the offer and make its recommendation. A General Dynamics spokeswoman said the company had not yet reviewed Northrop’s bid.
Northrop’s offer gives Newport shareholders the option to receive $67.50 a share in cash or shares of Northrop common stock. Northrop said it expects to issue about 16.6 million shares of its common stock to complete the transaction. That bid matches an offer from General Dynamics, which had planned to acquire Newport in a mutually negotiated $2.1-billion deal, announced in April.
Newport News last week told shareholders it would stick with the General Dynamics deal while waiting for details of Northrop’s proposal. Earlier, Newport had recommended that shareholders not take any action until the company’s board had reviewed the bids.
Northrop announced its unsolicited takeover offer for Newport on May 8, saying the merger of General Dynamics and Newport News would create a monopoly by combining the nation’s two nuclear shipyards.
The combination of Northrop and Newport News would give Northrop a commanding position in the market for U.S. Navy surface ships.
On the New York Stock Exchange, Newport News shares fell 14 cents to close at $63.77, Northrop declined 73 cents to $89.47 and General Dynamics dropped $3.64 to $80.01 amid a broad market downswing.
Shares of all three defense contractors have climbed steadily over the last year, outperforming the broad-based Standard & Poor’s 500 index, which has fallen about 7% in the period.
