Northrop Grumman plans to integrate elements of newly-acquired Litton Industries into its defence electronics and information technology sectors by year-end.
Litton's shipbuilding and commercial electronics businesses will then become standalone sectors within Northrop Grumman, says chairman Kent Kresa.
The $5.1 billion purchase of Litton, completed on 3 April, lifts Northrop Grumman into third place among US defence contractors, behind Lockheed Martin and Boeing but ahead of Raytheon. The combined company is expected to have revenues of $15 billion this year, rising to $18 billion by 2003.
The merger "creates a global defence electronics powerhouse and a major federal information technology contractor", says Kresa. Northrop Grumman also becomes a warship prime contractor as a result of the Litton deal, while the acquisition has enhanced the company's electronic warfare portfolio and expanded its capabilities in electro-optics.
Defence electronics are expected to account for 35% of sales by 2003 and information technology 25%, with airborne and ship systems each at 17%. Kresa sees commercial electronics as a sector with potential for high growth.
Northrop Grumman will announce details of the restructuring of its defence electronics and information technology businesses within 30 days.
The company is aiming for savings of $100 million within the first year and "$250 million near term", he says. "We will review all businesses for cost reductions and evaluate all assets for their fit. We don't see any that do not fit, but there are no preconceived notions."
When it comes to transatlantic co-operation, Kresa sees "no negatives" from the acquisition. "Litton will allow us to do more transatlantic ventures and also do manufacturing in Europe."
Source: Flight International
