Northrop Grumman Corp. started its exchange offer
for shares of Newport News Shipbuilding Inc., moving forward with its hostile bid despite Newport's planned merger with rival General Dynamics Corp. Northrop said it would immediately enter negotiations with Newport News if the maker of nuclear-powered aircraft carriers and submarines allowed Northrop to conduct a due diligence review.
A spokeswoman for Newport News said the board would review the offer and make its recommendation. A General Dynamics spokeswoman said the company had not yet reviewed Northrop's bid. Northrop's offer gives Newport shareholders the option to receive $67.50 per share in cash or shares of Northrop common stock
. Northrop said it expects to issue about 16.6 million shares of its common stock to complete the transaction. That bid matches an offer from General Dynamics, which had planned to acquire Newport in a mutually negotiated $2.1 billion deal, announced in April.
Newport News last week told shareholders it would stick with the General Dynamics deal while waiting for details on Northrop's proposal. Earlier, Newport had recommended that shareholders not take any action until the company's board had reviewed the bids.
Northrop announced its unsolicited takeover offer for Newport on May 8, saying the merger of General Dynamics and Newport News would create a monopoly by combining the nation's two nuclear shipyards.
The combination of Northrop and Newport News would give Northrop a commanding position in the market for U.S. Navy surface ships. - (Reuters)