In a deal that will create the world's biggest manufacturer of warships, Newport News Shipbuilding approved a $2.1 billion cash-and-stock bid from defence group Northrop Grumman.
The deal followed the decision by the US Justice Department to file a suit to block General Dynamics' proposed $2.6 billion cash acquisition of Newport News. The board of Newport News had already approved the General Dynamics bid, but the Justice Department feared the deal would create a monopoly. Charles James, assistant attorney general in charge of antitrust issues, said a takeover by General Dynamics would have given them "a permanent monopoly in nuclear submarines." The Justice department's action surprised observers, because there were initial indications of support within the Pentagon for the General Dynamics bid.
Kent Kresa, Northrop's chairman and CEO, said the acquisition would give the combined group "expertise in every class of nuclear and non-nuclear naval vessel." Northrop will initially operate Litton Industries - another shipbuilder it acquired earlier - and Newport separately. Eventually they will be combined into one operating sector. Newport News' chairman and CEO, William Fricks, will retire once the deal is complete.
