Northrop Grumman to create new ‘innovation’ business sector

WASHINGTON — Northrop Grumman will form a new business sector focused on new, innovative technology once it closes on its acquisition of Orbital ATK this year, a top Northrop executive said during a Thursday earnings call.

“As we prepare for integration, we are making good progress in our plans to combine our two outstanding companies after close,” said Kathy Warden, Northrop president and chief operating officer, adding that she continues to expect the transaction to close in the first half of 2018.

“We believe that after the transaction has completed, our collective set of market-leading technologies and products, along with very compatible, innovation-focused cultures, will enable us to better serve our customers’ current and emerging needs.”

play_circle_filled Air Force Secretary Heather Wilson gives the State of the Air Force address to a packed house at the AFA Air, Space and Cyber Conference at National Harbor, Maryland, on Sept. 18, 2017. (Alan Lessig/Staff)
Air Force secretary: No concerns over Northrop-Orbital agreement

Secretary of the Air Force Heather Wilson has no concerns “at this point” over Northrop Grumman’s proposed acquisition of Orbital ATK, but said the service will keep a close eye on how things move forward.

The companies plan to launch Northrop Grumman Innovation Systems later this year in the hopes of further driving the creation of new, cutting-edge technologies. That new sector will join Northrop’s aerospace systems, mission systems and technology services businesses.

Blake Larson, Orbital ATK’s chief operating officer, will lead Innovation Systems, Warden said. Meanwhile, Scott Lehr, Mike Kahn and Frank Culbertson — Orbital’s presidents for its flight, defense and space systems businesses, respectively — will retain their current roles.

“Maintaining this leadership team will ensure operational continuity and facilitate the integration of our two companies. We believe our combination represents a powerful opportunity to better serve customers through accelerated innovations applied to new product development and enhancement of our current offerings,” she said.

Northrop and Orbital ATK reached an agreement in September that would allow the former company to buy the latter at a price of about $9.2 billion. The deal was seen by market analysts as a smart way for Northrop to increase its expertise in space systems, a key sales area of Orbital ATK where Northrop has historically lagged.

Since that announcement, Orbital ATK shareholders have approved the deal, and the Federal Trade Commission is currently reviewing the proposed transaction in consultation with the Defense Department, said Warden, who declined to provide further details on when the buy would be completed.

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