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Aviation History
2001
2001 - 0007.PDF
Northrop Grumman buys Litton GUY NORRIS/LOS ANGELES NORTHROP Grumman is to take over California-based defence electronics and informa tion systems giant Litton Industr ies inadeal worth over$5.1 billion. The combined company will have projected revenues of $15 billion this year, growing to around $ 18 billion by 2 003, says Northrop Grumman chairman and presi dent, Kent Kresa. He does not expect the deal to fall foul of US antitrust laws unlike the company's aborted merger with Lock-heed Martin. "The difference is that we are acquiring as opposed to being acquired. Secondly, we feel there is virtually no overlap, which was a great concern with Lockheed Martin. So we don't think that will be a problem. "It is a way of enhancing the overall capabilities of the company in a direction we have already chosen," says Kresa, who expects the acquisition of Litton's strong US Navy shipbuilding side to pro vide fertile ground for Northrop Grumman's recent focus on devel oping its platform capability. The result, assuming the deal is approved, will be a diverse compa ny with strong aerospace and defence electronics interests, ship systems, information systems and electronic components and materials. One of the only signifi cant overlap areas, that of electronic warfare, is not expected to be a major hurdle given the US Government's recent approval of the BAE Systems - Lockheed Martin Sanders deal. The move also signals a reverse of Northrop Grumman's earlier strategy to seek buyers for some of its aerospace and defence electronics businesses. "It enhances our capabilities tremendously and on ship platforms we will be prime," Kresa adds. The combined company expects to see initial cost savings of around $ 100 million, rising to $2 50 million in the next few years following the completion of the merger in the first quarter of this year. Kresa says the projected savings with Litton represent a "very conservative number". Northrop Grumman is expect ed to achieve sales of $7.6 billionin 2000, with Litton's revenues for the year estimated at $5.58 billion. The takeover agreement has been six months in the making. The acquisition is an all-cash deal and the company plans to raise additional capital through a stock offering once the transaction is closed. Shareholders of Litton - which, unlike Northrop Grum man, has become relatively unpop ular on Wall Street - stand to ben efit from the deal. The company has recently been criticised for delays in building the first San Antonio LPD 17 Class amphibious assault ships and, other than its acquisition of Avondale, it has been unable to match the corporate growth of the majority of its defence industry rivals. Litton's products include a wide range of inertial navigation systems; electronic warfare and IFF systems; lasers; night vision equipment; ruggedised computers and displays; digital battlefield sys tems; missile and air defence sys tems; tactical and coastal defence, strategic command, control and communications systems; infor mation technology infrastructure engineering; software develop ment; shipbuilding and a broad range of electronic component and materials manufacturing. • First modified RAH-66 Comanche prototype undergoes test flight Boeing Sikorsky has test flown its first modified RAH-66 Comanche prototype incorpo rating a redesigned empennage, lowered exhaust doors, alter nate main rotor pylon and main rotor fairing. The helicopter's horizontal stabiliser has been lowered and two vertical end plates added to reduce buffet ing. The initial prototype now also has a mock-up of the mast- mounted fire control radar. NEWS IN BRIEF • GREECE DEMOTED Greece has become the first European Joint Aviation Authorities country to be rated Category 2 under the US Federal Aviation Administration International Aviation Safety Assessment. The downrating follows an FAA assessment that Greek safety oversight arrange ments do not comply with ICAO standards. Ministers fail to approve go-ahead of Galileo navigation system ANDREW DOYLE/MUNICH EUROPEAN transport minis ters have delayed until April a decision on authorising develop ment of the Galileo satellite navi gation system. The move comes as a major disappointment to the European Commission (EC) and companies aiming to develop and fund the system, including Astrium-led. Galileo Industries. The ministers failed to resolve concerns over the role of the European Commission in the project, and asked for the financing concept and certain other aspects to be reviewed. The €3 Million ($2.8 billion) Galileo system is to be funded by a public-private partnership (PPP). Although there is wide support among EC member states for Galileo, which would rival the US-controlled global positioning system, die EC's year-long defini tion studies have failed to resolve crucial issues concerning the PPP, system management and liability. "Galileo Industries is very unhappy with the delay because it means we will hold up the develop ment phase," says Astrium. "We need a decision next April because if it slips later and later it could become too expensive." The consortium, which includes Astrium, Alcatel Space and Alenia Spazio, wants to move ahead with arranging private-sector participa tion in the funding of Galileo, and hopes to be the prime contractor in the project which is likely to comprise 30 medium earth orbit satellites. Galileo Industries recently warned the EC transport commis sioner, Loyola de Palacio, that it urgently needs a statement on the level of public funding to be pro vided and the likely contractual framework. It also wants an appro priate management structure to be put in place (Flight International, 12-18 December). • FLIGHT INTERNATIONAL 2 - 8 January 2001 5
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