Faced with the need to consolidate its Gulf Coast shipbuilding operations and a shipbuilding business that increasingly isn’t aligned with its long-term strategic priorities, Northrop Grumman [NOC] yesterday said it is exploring strategic alternatives for its shipbuilding business.
Strategic alternatives often end up being the divestment or sale of a business. Credit Suisse is the company’s financial advisor here.
“Our decision to explore strategic alternatives for Shipbuilding is the result of a portfolio assessment to determine how to best serve our shareholders, customers and employees,” Wes Bush, Northrop Grumman’s president and CEO, said in a statement. “The performance improvement initiatives underway in our Gulf Coast operations will be further enhanced by the facilities consolidation.”
The facilities consolidation refers to a decision the company also announced to migrate all of its ship work in the Gulf Coast region to Mississippi. The company will close out operations at its facility in Avondale, La., in 2013 as work there winds down.
Bush added that “Recognizing our company’s long term strategic priorities, we foresee little synergy between Shipbuilding and our other businesses.”
The company also announced a $113 million pre-tax charge related to the shipbuilding consolidation, which will be more than offset by an unrelated $296 million tax benefit in the second quarter of 2010.