Northrop agrees to buy Litton for $3.8 billion

In a deal that is expect
29 December 2000

In a deal that is expected to bolster its product offerings on information technology systems for military navigation, leading military equipments contractor, Northrop Corporation, agreed to buy Litton Industries for an estimated $3.8 billion in cash.

Litton is a leading supplier of military electronics and information systems and the largest maker of surface combat ships in the US. With this acquisition, which gave the leading contractor a new core competency and filled a major gap in its overall business portfolio, Northrop will be able to expand its reach in the military equipment market and provide a wider range of products to its major clients like the US and other governments.

The deal was consummated after more than a month of negotiations that began with the announcement by Litton of its plans to sell its military electronics business in early November.

The new merged entity would be headed by Kent Kresa, currently chairman and chief executive of Northrop. Michael R Brown, chairman and chief executive of Litton, plans to retire. The combined entity is likely to have about 79,000 employees, although analysts expect the company to introduce aggressive job cuts.