Flush with cash from the recent spin-off of its former shipbuilding sector, Northrop Grumman [NOC] yesterday said it has repurchased 15.6 million shares of its common stock for $1 billion.
“This transaction will immediately reduce our outstanding shares by approximately 5 percent and demonstrates our continued commitment to value creation through effective cash deployment,” Wes Bush, Northrop Grumman’s president and CEO, said in a statement.
The spin-off of Huntington Ingalls Industries [HII] generated $1.4 billion cash for Northrop Grumman, which the company used to beef up its stock repurchase authorization to $4 billion (Defense Daily, April 28). With the $1 billion purchase of shares from Goldman, Sachs & Co., Northrop Grumman has $3 billion remaining on its share repurchase authorization.
The repurchase of stock by a company increases the value of the remaining shares for shareholders. In addition to increasing the dollars available to its share repurchase program, Northrop Grumman last month also said it would increase its quarterly stock dividend by more than 6 percent, further boosting shareholder value.