Northrop Grumman to sell TASC for $1.65 billion to fund share repurchase

Defence aerospace contractor Northrop Grumman has signed a definitive agreement to sell its advisory services business, TASC, Inc., for $1.65 billion in cash to an investor group led by General Atlantic LLC and affiliates of Kohlberg Kravis Roberts & Co. L.P.

Completion of the transaction is subject to customary regulatory conditions including Hart-Scott-Rodino approval. The transaction is expected to close by year end.

Northrop Grumman's board of directors separately authorised a $1.1-billion increase in the company's share repurchase programme. At the end of the third quarter of 2009, approximately $280 million remained on the company's prior $2.5 billion share repurchase authorisation.

The company expects the sale to generate net cash proceeds, after taxes, of approximately $1.1 billion. Net proceeds will be used to repurchase shares of common stock, after which the transaction is expected to be neutral to Northrop Grumman's 2010 earnings per share from continuing operations.
The company also expects the transaction to be neutral to 2009 net income and diluted earnings per share.

"This transaction is in the best interest of Northrop Grumman's customers, employees and shareholders," said Ronald D. Sugar, chairman and chief executive officer.

Sugar aded, "It reflects Northrop Grumman's desire to align quickly with the government's new organisational conflict of interest standards, while preserving TASC's unique organisational culture and its status as the advisory services employer of choice. TASC is a remarkable organization with a proud 43-year heritage of supporting critical national security missions. We are confident the investors understand the critical importance of its customers' missions and the depth and sophistication of its employees' expertise."