By Ann Roosevelt
Northrop Grumman [NOC] yesterday said it completed the previously announced spin-off of its subsidiary Huntington Ingalls Industries Inc. [HII].
Northrop Grumman stockholders of record at the close of business of the New York Stock Exchange (NYSE) March 30 received one share of HII common stock for every six shares of Northrop Grumman common stock held. Stockholders will receive cash in lieu of fractional shares of HII.
There will be no change to the trading of Northrop Grumman’s stock on the NYSE. Yesterday, Huntington Ingalls began trading as HII on the NYSE.
As a result of the spin-off, Northrop Grumman will report Shipbuilding financial results as discontinued operations for the 2011 first quarter and all prior periods.
“(The) completion of the separation of Huntington Ingalls from Northrop Grumman is an important milestone benefitting both companies,” said Wes Bush, Northrop Grumman chief executive officer and president. “We thank HII for their many contributions to our company and the defense of our nation, and wish them the best as an independent company.”
Earlier in March, the Northrop Grumman board of directors approved the spin-off of its shipbuilding operations to company stockholders pending final approval from the Securities and Exchange Commission (Defense Daily, March 16).
In February, Northrop Grumman said HHI planned to offer up to nearly $1.2 billion in bonds and obtain up to nearly $1.1 billion in credit as part of an expected spin-off of the shipbuilding business (Defense Daily, Feb. 28). At that time, HII intended to offer $1.2 billion in bonds due in 2018 and 2021 in a private placement.
In 2010, Northrop Grumman unveiled plans to divest its shipbuilding operations. The shipbuilding operations include facilities and property in Newport News, Va., Pascagoula, Miss., and Avondale, La., employing about 38,000.
HII will be the largest private employer in Mississippi and Louisiana and the largest manufacturing employer in Virginia, according to information HII recently distributed to Congress.
In addition to announcing the divestiture, Northrop Grumman last year also said it would discontinue operations in Avondale in 2013 as work there winds down and would consolidate its Gulf Coast shipwork in Pascagoula.
HII also mentioned some of the new programs it will be focusing on, including becoming a subcontractor for the design and engineering of the next class of ballistic missile submarine and the builder for the new class of amphibious assault ship, the LSD(X), which will follow the LPD-17 and LHA-6 class of vessels.
Bush said with the spin-off complete, Northrop Grumman will now focus on its core markets of aerospace systems, electronic systems, information systems and technical services.
“Our portfolio has tremendous capability, technology and synergy across these areas, and we are fully dedicated to delivering innovative and mission-critical systems and products,” he said. “Going forward, we will create value for shareholders, customers and employees through a more focused portfolio and continued performance improvement.”
Credit Suisse served as lead financial adviser and joint lead financing arranger. Perella Weinberg Partners served as financial adviser. JPMorgan Chase served as joint lead financing arranger. Gibson, Dunn & Crutcher served as legal adviser.