Northrop CEO rules out break-up of firm
WASHINGTON (Reuters) - Northrop Grumman Corp (NOC.N) Chief Executive Wes Bush said the defense contractor has no plans to break itself up, and he would not forecast any large-scale mergers for the industry in the near term.
Bush rejected speculation that Northrop's planned separation of its $6 billion shipbuilding operations -- the latest reshaping of the company's portfolio -- could lead to a break-up of the whole company.
"We are not dismantling the company," Bush said at the Reuters Aerospace and Defense Summit in Washington on Wednesday, adding that the shipbuilding separation was aimed at increasing value for shareholders.
Asked about the likelihood of mergers between major defense contractors in response to a changing security environment and tightening budgets, Bush said, "All companies have a fiduciary obligation to shareholders to have an open mind.... But I would not forecast on the near-term horizon any large-scale activities."
Northrop is at an early stage of selling or spinning off its shipmaking business and would be open to both strategic buyers and private equity firms, Bush said.
"Any transaction of this magnitude takes a little while to work through," he said. "I think our expectation early on had been that there would be greater interest on the private equity side, but as we begin the process we are open to both strategic buyers and private equity buyers," Bush said.
Bush, who took the top job at Northrop this year, said the company does not see any "substantial hole" to fill in its four core areas of communications and intelligence work, cybersecurity, unmanned systems and logistics.
"We feel we have every opportunity to be extraordinarily disciplined in that process. We don't see a hole that we desperately need to fill," he said.
"We have been biased more toward returning cash to shareholders and managing our liabilities, not so much on the M&A side because we haven't seen great value creation."
Northrop Grumman, which is moving its headquarters to Virginia from Los Angeles next year, bowed out of the multibillion-dollar U.S. aerial refueling tanker competition earlier this year and is working to improve operations and lower its cost structure.
(Reporting by Soyoung Kim, Andrea Shalal-Esa, Karen Jacobs; Editing by John Wallace and Steve Orlofsky)
- Cortege departs to take Mandela's body to lie in state |
- U.S. Mega Millions lottery up to $400 million, 2nd-biggest ever
- Uruguay becomes first country to legalize marijuana trade
- UPDATE 2-U.S. Mega Millions lottery up to $400 million, 2nd-biggest ever
- U.S. budget deal could usher in new era of cooperation