NORFOLK, Va. – Newport News Shipbuilding Inc. has agreed to a $2.1 billion takeover by Northrop Grumman Corp., the companies announced Thursday.
The boards of directors of both companies approved the terms of the transaction, in which the Los Angeles-based conglomerate will acquire all the outstanding shares of Newport News.
Northrop Grumman will also assume $500 million of Newport News debt.
The announcement came a day after Newport News' board met to discuss the deal and adjourned without making any public statement about what had taken place. Northrop Grumman's board had already approved the deal.
Rival shipbuilder General Dynamics Corp. started the bidding for Newport News six months ago but support for that bid evaporated in recent weeks after federal antitrust authorities said they would challenge such a combination.
Newport News shareholders can now decide whether to receive $67.50 per share or Northrop Grumman common stock equivalent to $67.50 per share.
The merger will create a combined company with a work force of about 97,000.
Although some job cuts are expected, officials do not ``anticipate significant layoffs,'' said Northrop Grumman spokesman Randy Belote.
``There will be some obvious corporate headquarter redundancies,'' he said, declining to provide more details.
In a statement, Newport News chairman and chief executive William Fricks said the merger will ``enhance the future of Newport News Shipbuilding, its employees and our ability to serve our primary customer, the U.S. Navy.''
Fricks will retire when the deal is completed, and Newport News will operate as a subsidiary of Northrop Grumman. Thomas Schievelbein, currently Newport News' executive vice president and chief operating officer, will become president of the Newport News division.
Kent Kresa, Northrop Grumman chairman and chief executive, said in a statement, said he was pleased with the deal.
``With Newport News, we are creating a $4 billion world-class, fully capable shipbuilding enterprise with expertise in every class of nuclear and non-nuclear naval vessel,'' Kresa said in a statement.
A majority of Newport News shareholders must tender their shares for the deal to proceed, but officials expect to complete the transaction by the end of this month.
Northrop Grumman made its unsolicited bid to buy the shipyard in Newport News last May, two weeks after Falls Church-based General Dynamics made a similar offer.
Northrop Grumman successfully argued the General Dynamics bid would eliminate competition and endanger national security.
General Dynamics and Newport News are the nation's only nuclear submarine builders, and Newport News is the only builder of nuclear-powered aircraft carriers.
Last month, the Justice Department said it would go to court to block the General Dynamics bid, and the Pentagon said it supported Northrop's bid. Last week, the Justice Department finished its investigation of the impact of the Northrop bid without opposing the transaction.
Newport News stock was trading at $55.05 per share on April 24, the day before General Dynamics made its offer. That means shareholders will reap a premium of more than 22 percent for their holdings.