Orbital Sciences Corp. (NYSE: ORB) has agreed to merge with ATK‘s (NYSE: ATK) aerospace and defense groups in an approximately $5 billion transaction to create a combined company that will operate as Orbital ATK once the deal completes.
In separate releases from ATK and from Orbital, the companies said Monday that they expect to complete the merger by the end of calendar year 2014 and is subject to the approval of both ATK’s and Orbital’s shareholders.
As part of the agreement, ATK will spin off its commercial ammunition and sporting accessory business group into an independent, publicly-traded company that will be led by ATK President and CEO Mark DeYoung.
Orbital President and CEO David Thompson will lead the new company, which Orbital says had nearly $4.5 billion in calendar year 2013 revenue and will have nearly 13, 000 employees across 17 states when the deal completes.
Thompson said the combined company intends to build on complementary technologies and products as it seeks to grow into adjacent markets and further build its offerings in the space, defense and aviation systems markets.
Dulles, Va.-headquartered Orbital ATK will work in U.S. and international markets to offer space launch vehicles, propulsion systems, missiles, defense electronics, satellites, space systems, armament systems, ammunition and aircraft structures.
“Orbital has been a customer of ATK for more than 25 years; we are familiar with each other and each company’s capabilities, ” DeYoung said.
“We see opportunities to build on ATK’s success in aerospace and defense through a combination with Orbital’s proven track record in creating new launch vehicles, satellites and other advanced space technologies, ” he added.
The companies estimate that Orbital ATK has a total contract backlog of $11 billion, which includes $3 billion in unexercised options from Orbital and $200 million in unexercised options from ATK.
Upon closing of the merger, ATK shareholders will own approximately 53.8 percent of Orbital ATK and Orbital shareholders will own the remaining 46.2 percent of the combined company.
ATK and Orbital expect the combined company to have $1.4 billion in net debt upon closing after after taking into account nearly $300 million in combined cash balances.
Retired U.S. Air Force Gen. Ronald Fogleman will serve as chairman of the combined company’s board of directors, which will contain seven directors from ATK’s board and nine directors from Orbital’s board.