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Northrop Grumman (NOC) to Divest Federal IT Business for $3.4B
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Northrop Grumman Corporation (NOC - Free Report) recently signed an agreement to sell off its federal IT and mission support services business to Peraton, for $3.4 billion in cash. Peraton is an affiliate of Veritas Capital, a private investment firm.
The deal is expected to close in the first half of 2021, subject to regulatory approvals and customary closing conditions.
Divesture Benefits for Northrop Grumman
Northrop Grumman is well poised to benefit from the divestiture of its federal IT and mission support services business. The divestment is in line with the company’s strategy of focusing on growing its core businesses, driving shareholder value and the execution of its capital allocation strategy. Northrop Grumman expects to use the $3.4 billion worth sale proceeds primarily for share repurchases and debt retirement.
Considering the current volatile market situation on a global scale, Northrop Grumman intends to focus on more profitable assets with higher returns. The latest divestment seems to have been guided by that intention of this defense contractor.
Similar Strategies Deployed by Other Defense Players
Divestment of businesses has become increasingly popular in recent times as it allows companies to increase focus on core businesses, eliminate redundancies and improve operational efficiency and cost structure. Notably, alongside Northrop Grumman, there are other major defense players that have indulged in divestment activities.
For instance, in June 2020, AAR Corp. (AIR - Free Report) entered into an agreement to divest its aerospace composite manufacturing business to an affiliate of Architect Equity. This was in line with its multi-year strategy to focus on core services offerings and aviation aftermarket operations.
During the same month, General Dynamics' (GD - Free Report) Mission Systems unit divested its antenna systems business, SATCOM Technologies, to Communications & Power Industries, also known as CPI. In November 2019, Lockheed Martin (LMT - Free Report) divested its Distributed Energy Solutions (LM-DES) business to TRC Companies to focus on energy strategies for its other variants of products and technologies.
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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Northrop Grumman (NOC) to Divest Federal IT Business for $3.4B
Northrop Grumman Corporation (NOC - Free Report) recently signed an agreement to sell off its federal IT and mission support services business to Peraton, for $3.4 billion in cash. Peraton is an affiliate of Veritas Capital, a private investment firm.
The deal is expected to close in the first half of 2021, subject to regulatory approvals and customary closing conditions.
Divesture Benefits for Northrop Grumman
Northrop Grumman is well poised to benefit from the divestiture of its federal IT and mission support services business. The divestment is in line with the company’s strategy of focusing on growing its core businesses, driving shareholder value and the execution of its capital allocation strategy. Northrop Grumman expects to use the $3.4 billion worth sale proceeds primarily for share repurchases and debt retirement.
Considering the current volatile market situation on a global scale, Northrop Grumman intends to focus on more profitable assets with higher returns. The latest divestment seems to have been guided by that intention of this defense contractor.
Similar Strategies Deployed by Other Defense Players
Divestment of businesses has become increasingly popular in recent times as it allows companies to increase focus on core businesses, eliminate redundancies and improve operational efficiency and cost structure. Notably, alongside Northrop Grumman, there are other major defense players that have indulged in divestment activities.
For instance, in June 2020, AAR Corp. (AIR - Free Report) entered into an agreement to divest its aerospace composite manufacturing business to an affiliate of Architect Equity. This was in line with its multi-year strategy to focus on core services offerings and aviation aftermarket operations.
During the same month, General Dynamics' (GD - Free Report) Mission Systems unit divested its antenna systems business, SATCOM Technologies, to Communications & Power Industries, also known as CPI. In November 2019, Lockheed Martin (LMT - Free Report) divested its Distributed Energy Solutions (LM-DES) business to TRC Companies to focus on energy strategies for its other variants of products and technologies.
Price Performance & Zacks Rank
In the past year, shares of Northrop Grumman, a Zacks Rank #3 (Hold) company, have declined 12.3% compared with industry’s 24.1% fall. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>