Northrop Corp. won the takeover battle for Grumman Corp., sweeping in with a $2.11 billion bid and breaking up a merger agreement with Martin Marietta Corp.
Grumman's board unanimously approved Northrop's offer and recommended Monday that shareholders sell to the Los Angeles-based maker of the B-2 Stealth bomber.The fight for Grumman resulted from consolidation of the defense industry in response to Pentagon cutbacks. Companies are scrambling to buy each other to establish dominance.
"This merger will enable Northrop to pursue its primary business objective of being a key member of the nation's defense industrial team well into the 21st century," Northrop Chairman Kent Kresa said in a statement.
Grumman had asked both its suitors to submit their best offers in sealed bids Thursday. Northrop responded with a $62-per-share bid while Martin Marietta left its $55-per-share, or $1.93 billion, offer unchanged.
"An increase of $7 a share over the original offer is an excellent deal for our shareholders, and we're pleased to have four weeks of uncertainty behind us," Grumman Chairman Renso L. Caporali said.
The combined company, to be called Northrop Grumman Corp. would have annual revenues of more than $8 billion.
Wall Street expected the bidding to go higher and sent Grumman stock to nearly $65 per share in recent weeks. Grumman's stock plunged $3 per share this morning to $61.621/2.
Grumman agreed to pay Martin Marietta $50 million plus up to $8.8 million in expenses if it sold to another firm. Martin Marietta said Thursday that it expects Grumman to make the payment.