Investing.com - Financial Markets Worldwide
👀 Ones to watch: The MOST undervalued stocks to buy right nowSee Undervalued Stocks

Northrop's pricey purchase of Orbital ATK is worth it, investors say

Published 09/18/2017, 06:56 PM
© Reuters. Northrop's pricey purchase of Orbital ATK is worth it, investors say
NOC
-
COL
-
RTX
-
OA
-
  • Northrop Grumman 's (NYSE:NOC) $9.2B purchase including debt of Orbital ATK (NYSE:OA) was appreciated by investors of both companies, which ended today's trade with respective 3.3% and 20.2% gains.
  • Analysts say the proposed deal would help NOC produce and launch large and small spy and communications satellites and develop new high-speed weapons and missile defense systems, and should clear the bar with regulators since there's little overlap in the companies' businesses.
  • The acquisition gives NOC "more options in DoD growth segments, such as missile defense and space, [and] exposure to the munitions refill cycle for both U.S. and some foreign military sales," Cowen analysts say.
  • Defense is a hot sector amid a likely meaningful pickup in defense spending after years of sequestration amid North Korea concerns, and while "buying at the top isn't usually a great M&A strategy... this is one case where the revenue opportunities for the combined company are pretty clear and likely to win over investors," Bloomberg's Brooke Sutherland writes.
  • Even with NOC paying a premium over OA's record stock price, "it's still offering a cheaper multiple than what United Technologies (NYSE:UTX) is paying for Rockwell Collins (NYSE:COL), and the revenue benefits there are much murkier," according to Sutherland.
  • Note: The U.S. Senate has easily passed a $692B defense policy bill.
  • Now read: Northrop Grumman (NOC) To Acquire Orbital ATK - Slideshow

Original article

Latest comments

Install Our App
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.