November 8, 2001
Northrop Grumman and NNS ink acquisition agreement
The two boards approved terms under which Northrop Grumman will acquire all the outstanding shares of Newport News.
NNS shareholders may elect to receive either $67.50 per share in cash or a number of shares of Northrop Grumman common stock designed to provide a value of $67.50, subject to certain limitations and proration procedures.
Northrop Grumman expects to promptly amend its existing offer documents in order to reflect the merger agreement. Following the completion of the exchange offer, Northrop Grumman will consummate a second-step merger in which all of the remaining Newport News Shipbuilding shareholders will have the same right to elect to receive cash or shares of Northrop Grumman stock as described above.
"We are very pleased with our strategic acquisition of Newport News," said Kent Kresa, Northrop Grumman chairman and chief executive officer. "With Newport News, we are creating a $4 billion world-class, fully capable shipbuilding enterprise with expertise in every class of nuclear and non-nuclear naval vessel."
Newport News will initially be operated as a Northrop Grumman sector. Longer term, Northrop Grumman plans to combine its two shipbuilding businesses into one operating sector. Thomas Schievelbein, currently Newport News' executive vice president and chief operating officer, will become president of the Newport News operating sector. He will also serve on Northrop Grumman's corporate policy council.
Newport News chairman and CEO Bill Fricks has announced his intention to retire once the transaction has been finalized.
The acquisition is valued at approximately $2.6 billion, which includes the assumption of approximately $500 million of Newport News Shipbuilding debt. The exchange offer, subject to the tendering of a majority of the outstanding Newport News Shipbuilding shares, is expected to close by the end of November. Citigroup's Salomon Smith Barney acts as principal strategic advisor to Northrop Grumman and represented the company in the transaction. JP Morgan Chase also provided financial advice. Newport News Shipbuilding was advised by Credit Suisse First Boston. .