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Reports: Northrop Close to Sealing $7.8B Cash Deal for Orbital ATK

Northrop Grumman (NYSE: NOC) is close to finalizing an agreement to buy Orbital ATK (NYSE: OA) as Northrop aims to broaden its portfolio of missiles and space platforms, Defense News reported Monday.

Defense News cited a Wall Street Journal report that says both companies could unveil the transaction as early as Monday and estimates the deal to reach more than $7.8 billion in cash.

Byron Callan, a director at Capital Alpha Partners, said the potential deal could help Northrop tap Orbital ATK’s knowledge and experience in electro-optical countermeasures and missiles.

Reuters also reported that the transaction’s final value could be worth more than $7.7 billion given Orbital ATK’s $6.3 billion in stock value and $1.4 billion in long-term debt.

Callan added Orbital ATK’s rocket motors could also broaden Northrop’s product offerings to the Defense Department.

Orbital ATK’s 2016 financials noted the Dulles, Virginia-based aerospace and defense contractor has contracts with the U.S. Army and NASA and Reuters added such contracts would provide Northrop annual revenue worth more than $4.4 billion.

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