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Litton tows in Avondale
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June 3, 1999: 12:09 p.m. ET
Agrees to acquire shipbuilder in $529M deal; Newport News bows out
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NEW YORK (CNNfn) - Defense contractor Litton Industries Inc. said Thursday it has entered into an agreement to acquire shipbuilder Avondale Industries in a $529 million deal, prompting rival Newport News Shipbuilding to pull out of the bidding.
Litton said it will acquire Avondale for $39.50 a share in cash. The combined company will have revenue of about $5.5 billion, backlog of $8.8 billion, total market capitalization of $4.7 billion, and more than 40,000 employees.
Separately, rival contractor Newport News Shipbuilding (NNS) announced that it would not increase its bid to merge with Avondale. The two companies had agreed on Jan. 19 to a stock-for-stock transaction valued at $35.50 per share, or about $500 million.
Last month, Litton (LIT) launched a pair of unsolicited takeover bids for Newport News and Avondale (AVDL). The Pentagon voiced its opposition to Litton's bid for Newport News, claiming it would slash competition in U.S. military shipbuilding.
Litton stood by its bid to acquire Newport News Thursday, saying it "would benefit the constituencies of both companies." The Woodland Hills, Calif.-based company said it is continuing to explore ways of satisfying the government's concerns about the proposed acquisition.
Litton was up 3-1/2 in Thursday morning trading at 70-7/16. Avondale was down ¼ at 38-1/16 and Newport News was down ½ at 28-3/8.
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