Defense contractor Northrop Grumman Corp. (NYSE:NOC) said Sunday it is
selling its military intelligence unit Tasc Inc. for $1.65 billion in cash to an investor group led by General Atlantic LLC and affiliates of Kohlberg Kravis Roberts & Co.
In a similar deal last year, Carlyle Group
paid $2.5 billion for the government consulting unit of Booz Allen Hamilton Inc.
Northrop chairman and CEO Ronald Sugar, who
plans to retire, said in a
press release that the sale of Chantilly, Va.-based Tasc "reflects Northrop Grumman's desire to align quickly with the government's new organizational conflict of interest standards." As
noted in The Deal Pipeline (subscription required), defense companies have been under fire for situations in which their consulting arms might be advising on procurement deals on which their weapons side is bidding.
Tasc became part of Northrop in 2001 when the defense giant acquired Litton Industries Inc. for $5 billion.
Northrop will use net cash proceeds from the sale, about $1.1 billion, to repurchase shares of common stock. On financing, KKR showed less reliance on outside banks with KKR Capital Markets arranging the senior subordinated notes with Highbridge Mezzanine Partners as the lead investor.
This deal follows the largest LBO of 2009, where TPG Capital and CPP Investment Board said on Nov. 5 they would
acquire market research firm IMS Health Inc. for $5.2 billion.
Analysis of the Tasc sale will follow on The Deal Pipeline. -
Baz HiralalSee the Northrop announcementSee the buyout firms' announcement
Join Corporate Dealmaker's LinkedIn forum
Adele Gulfo
And the winners are...
