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Litton Industries Poised to Acquire Avondale Industries as Newport News Shipbuilding Lacks Capital for Counterbid

Strategic Insights

— 1 min read

Litton Industries is on the verge of acquiring Avondale Industries after Newport News Shipbuilding (NNS) announced it cannot compete with Litton's bid, citing lack of capital. Industry sources indicated that NNS has ruled out making a counteroffer, despite a deadline of Thursday to do so. Avondale's board of directors has determined that Litton's $529 million all-cash proposal is a superior offer, prompting the company to accept the bid.

Key Takeaways:

  • Litton Industries is poised to acquire Avondale Industries with a $529 million all-cash proposal, making it a superior offer to the previously announced merger agreement between Avondale and Newport News.
  • Newport News Shipbuilding lacks the capital to make a counterbid, according to industry sources, with NNS denying financial struggles but leaving open the possibility of a bidding war.
  • Avondale's board of directors has given NNS 48-hours written notice that it is prepared to accept the Litton offer, citing the superior value of the all-cash proposal.
  • Litton Industries has deep pockets and is confident in its ability to acquire Avondale, which is set to create a world-class shipbuilder.
  • The Pentagon has killed Litton's unsolicited offer for Newport News, citing concerns over research and development consolidation, but has cleared Newport News' bid for Avondale.
  • Earlier this year, the Pentagon leaned toward supporting Litton's offer for Avondale, indicating a shift in favor of Litton's proposal.

Statistics:

  • $529 million: The all-cash proposal made by Litton Industries to acquire Avondale Industries.
  • $39.50 per share: The price per share Avondale is willing to accept from Litton in an all-cash transaction.
  • One source: An industry insider who confirmed that Newport News lacks the capital to make a counterbid.
  • 48 hours: The written notice period Avondale has given NNS to accept or reject the Litton offer.
  • Thursday: The deadline for NNS to make a counterbid and prevent Litton from acquiring Avondale.
  • June 1: The date on which the Pentagon killed Litton's unsolicited offer for Newport News.

Sources:

  • "Industry sources said yesterday" (no further publication information provided)
  • Defense Daily (Defense Daily, June 1)
  • [no other sources mentioned]

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