NORFOLK (AP) Newport News Shipbuilding Inc., the nation’s only builder of nuclear aircraft carriers, agreed to a $2.1 billion takeover by Northrop Grumman Corp., the companies announced yesterday.
The Los Angeles defense conglomerate will acquire all the outstanding shares of Newport News and assume $500 million of Newport News debt.
Although a majority of Newport News shareholders must tender their shares for the deal to proceed, the transaction is expected to be completed by the end of the month.
With the purchase, Northrop Grumman adds a third huge shipyard, with 17,800 workers, to its portfolio. The company already owns yards in Louisiana and Mississippi that make Navy ships.
Although officials anticipate the elimination of some overlapping corporate management jobs, there are no plans for widespread cuts affecting shipyard workers or the yards themselves, said Randy Belote, a Northrop Grumman spokesman.
“There are no plans to close shipyards, there are no plans for significant layoffs,” he said.
The announcement came a day after Newport News’ board met to discuss the deal, which Northrop Grumman’s board already had approved.
Rival shipbuilder General Dynamics Corp., based in Falls Church, started the bidding for Newport News six months ago, but support for its bid evaporated in recent weeks after the Pentagon said it would support the Northrop Grumman bid and the Justice Department said it would challenge a combination of Newport News and General Dynamics.
Newport News shareholders can decide whether to receive $67.50 per share or Northrop Grumman common stock equivalent to $67.50 per share.
Thomas M. Meagher, an analyst with BB&T Capital Markets, said Northrop’s purchase of Newport News was a pre-emptive move to prevent General Dynamics from buying the shipyard.
Mr. Meagher likened Northrop and General Dynamics to two children in a sandbox and Newport News to a toy in that sandbox.
“Neither of them wanted it, but neither wanted the other to have it,” he said.
The deal will “enhance the future of Newport News Shipbuilding, its employees and our ability to serve our primary customer, the U.S. Navy,” William Fricks, Newport News chairman and chief executive, said in a statement.
Mr. Fricks will retire when the deal is completed. Newport News initially will operate as a subsidiary of Northrop Grumman with Thomas Schievelbein, Newport News’ executive vice president and chief operating officer, as president of the division.
Newport News shares rose 70 cents to $67.75 yesterday on the New York Stock Exchange.
Northrop Grumman shares climbed $1.87 to $97.95.