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Northrop sells jet parts unit
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June 12, 2000: 10:39 a.m. ET
Carlyle Group buys structural parts division, big Boeing supplier, for $843M
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NEW YORK (CNNfn) - Northrop Grumman Corp. agreed Monday to sell its commercial jet parts unit to Carlyle Group for $843 million in cash and securities, the company said.
Washington, D.C.-based Carlyle also agreed to take on $400 million in unfunded benefits. The unit is one of the biggest suppliers of large structural parts for jetliners to Boeing Co. (BA: Research, Estimates).
The sale includes properties in Dallas; Hawthorne, Calif.; Stuart, Fla.; and Milledgeville and Perry, Ga. Carlyle's commercial aerostructures sector will remain in Dallas and will operate under the name Vought Aircraft Co.
Northrop's Integrated Systems and Aerostructures sectors will be renamed Integrated Systems Sector and will move from Dallas to Washington, D.C.
 The deal is expected to close in 30 days. Northrop expects to restate calendar 2000 revenue of $7.6 billion to reflect the loss of about $1.2 billon in both recorded and projected commercial aerostructure sales. Northrop also anticipates one-time costs of about $70 million in calendar 2000 due to moving its ISA sectors from Dallas to Washington.
For calendar 2000, the company said the transaction may cut earnings per share by 50 cents due to one-time charges. However, the deal won't affect earnings of $9.30 to $9.60 a share for calendar 2000, Northrop said. In 2001, the company still expects revenue to increase to about $8.4 billion and double-digit growth in EPS from continuing operations in 2001.
In early morning trading, shares of Los Angeles-based Northrop Grumman fell 7/8 to 78-3/4.
Searching for a buyer
In April, Northrop (NOC: Research, Estimates) said it was exploring strategic alternatives for its commercial jet parts unit. The Wall Street Journal reported Monday that Northrop had struck a deal with Carlyle, a Washington buyout firm formed in 1987 and chaired by former Secretary of Defense Frank Carlucci. James A. Baker III, a former secretary of state, is a senior counselor at the firm, whose focus is on defense and aerospace industries, the paper said.
Carlyle Group controls about $10 billion in assets, according to the Journal.
Carlyle officials couldn't be reached for comment.
In addition to a graceful exit from a business that has struggled in recent years, the sale will give Northrop funds for acquisitions of its own. For example, Northrop and BAE Systems PLC are squared off in the final rounds of an auction to buy Lockheed Martin Corp.'s defense-electronics assets for as much as $1.5 billion, according to insiders quoted by the Journal. 
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Northrop Grumman
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