Northrop Shares Rise On $1.65B Sale Of Unit

WASHINGTON (AP) — Northrop Grumman Corp. shares rose Monday on news it is selling its contractor's advisory services unit for $1.65 billion in cash to a private equity firm in order to comply with new government regulations.

Shares of the Los Angeles company added $1.43, or 2.7 percent, to $53.80 in afternoon trading. The company's stock has traded between $33.81 and $54.14 over the last 52-week period.

On Sunday, Northrop Grumman announced plans to sell its advisory services unit TASC Inc. to private equity firm General Atlantic LLC and affiliates of Kohlberg Kravis Roberts & Co. to comply with the government's "conflict of interest standards."

TASC, based in Chantilly, Va., serves intelligence, defense and civil agencies. It has about 5,000 employees and is expected to record 2009 revenue of $1.6 billion. It is part of Northrop's information systems sector.

The defense contractor will use the proceeds for a $1.1 billion increase in its stock buyback program.

President Barack Obama in May signed into law the Weapon Systems Acquisition Reform Act to change how the government buys weapons. That law is designed to tighten restrictions on companies that compete for bids to supply the government with weapons and have consulting units, such as TASC, that advise the government on weapons procurements.