LOS ANGELES, Nov. 2 (UPI) -- Northrop Grumman Corp. said late Friday that the U.S. Department of Justice has cleared the way for it to complete its proposed $2.1 billion acquisition of Newport News Shipbuilding Inc.
Northrop Grumman said in a release that the Justice Department has closed its investigation into Northrop's proposal to acquire Newport News, thereby allowing the acquisition to proceed.
"We are very pleased with the action taken today by the Department of Justice," said Kent Kresa, Northrop Grumman's chairman and chief executive officer. "With Newport News, we will create a world-class, fully capable shipbuilding enterprise with expertise in every class of nuclear and non-nuclear vessels."
On Oct. 26, rival defense contractor General Dynamics and Newport News abandoned their plans to merge just two days after defense officials said they would back a $2.1 billion stock and cash bid from Northrop Grumman.
The Justice Department also filed suit in U.S. District Court in Washington to prevent General Dynamics from acquiring Newport News.
Charles James, assistant attorney general in charge of the department's Antitrust Division, said the $2.1 billion cash offer would give, "General Dynamics a permanent monopoly in nuclear submarines and would substantially lessen competition in surface combatants.
The two companies are the only makers of nuclear submarines and two of only three companies that build large ships of any kind for the U.S. Navy.
"We believe a combination of Northrop Grumman and Newport News Shipbuilding will serve the best interests of our shareholders, employees and customers as it continues to provide competition in an industry vital to the security and defense of our nation," said Kresa.
Ahead of the report, shares of Northrop Grumman gained 21 cents, or 0.21 percent, to close at $99.81 on volume of 599,700. Newport News shares rose 35 cents, or 0.51 percent, to close $69.40 on volume of 402,700.
Both companies are traded on the New York Stock Exchange.
