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Published on : Sep 18, 2017

Leading defense contractor Northrop Grumman has announced plans to purchase Orbital ATK Inc., a flourishing entity in the aerospace and defense sector. The official announcement is set to come in the following days, with Northrop Grumman looking to advance its claim in the highly prosperous defense and aerospace sector. The lure of the U.S.’s ground-based intercontinental ballistic missile defense system is expected to be a major target for Northrop Grumman, leading to unconventional inorganic growth tactics such as acquisitions.

Aerospace composites and rocket propulsion are among the key areas where Northrop Grumman would benefit from the acquisition. These two sectors represent significant scope in the defense sector, where missile defense systems are becoming increasingly important and aerospace composites are becoming a crucial part of aircraft design. Fending off competition from Boeing Inc., who are among the forerunners to get the multi-billion-dollar defense missile programs, has thus emerged as a major objective for established defense sector firms such as Northrop Grumman.

The deal is also expected to advance Northrop Grumman’s claim in the space aviation sector, which has become immensely lucrative following steady technological advancement. Orbital ATK is a known competitor to private-sector space aviation enterprises such as Elon Musk’s SpaceX Exploration Technology Corporation, which launches the Falcon 9 rocket, and United Launch Alliance, whose Atlas family of rockets has picked up steam in recent years. With this deal, likely to be valued at around US$7.5 bn, Northrop Grumman could soon emerge as a major player in space aviation, especially considering the longstanding expertise the company holds in the aviation sector.