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Northrop to buy Newport
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November 8, 2001: 12:15 p.m. ET
World's largest naval shipbuilder will be formed with $2.6B acquisition.
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NEW YORK (CNNmoney) - Northrop Grumman Corp. entered an agreement Wednesday to purchase Newport News Shipbuilding Inc. for a total of $2.6 billion, including $500 million in debt, which will create the world's largest builder of naval ships.
Under terms of the acquisition, expected to close by the end of November, Northrop will offer $67.50 for each Newport News share.
"We are very pleased with our strategic acquisition of Newport News," said Northrop Grumman (NOC: up $1.52 to $97.60, Research, Estimates) Chairman and Chief Executive Kent Kresa. "With Newport News we are creating a $ 4 billion world-class, fully capable shipbuilding enterprise with expertise in every class of nuclear and non-nuclear naval vessel."
In an unusual twist, the transaction has already received a green light from the Department of Defense (DOD) and the Department of Justice (DOJ), meaning the companies can close the deal as soon as shareholders tender their shares in support.
Both the DOJ and DOD were forced to reviewed the proposed union after Northrop Grumman launched a hostile bid for Newport News (NNS: up $0.45 to $67.50, Research, Estimates) last spring, trying to scuttle that company's previously agreed merger with rival defense contractor General Dynamics (GD: up $0.24 to $82.24, Research, Estimates), now the nation's second-largest naval ship builder.
Following the close of the transactions, the companies said Newport News will be operated as a separate unit, but the companies ship building divisions will eventually be consolidated into one operating unit.
The chairman and chief executive of Newport News, William Fricks, plans to retire upon completion of the acquisition. The Newport News unit will be led by its current executive vice president and chief operating officer, Thomas Schievelbein. 
-- from staff and wire reports
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