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TheStreet Open House

ATK to Merge with Orbital, Spin Sporting Business

NEW YORK (The Deal) -- Orbital Sciences  (ORB) and Alliant Techsystems (ATK), two companies who have weathered a slowdown in government spending, said Tuesday they intend to combine in a deal that would create a $4.5 billion-sales space and defense juggernaut.

Terms of the deal call for Arlington, Va.-based ATK to swap 0.449 of its shares for each share of Dulles, Va.-based Orbital, valuing Orbital at about $2.3 billion.

Post-deal current ATK shareholders will own about 53.8% of the combined company, to be called Orbital ATK Inc.

In conjunction with the merger ATK said it intends to spin its sporting group, a maker of ammunition and other products for hunters, as a separate publicly traded company. ATK said that about $1.4 billion in net existing company debt would remain with Orbital ATK at closing.

The Orbital-ATK deal would create a 13,000 employee government contractor focused on the manufacture of space launch vehicles and propulsion systems, tactical missiles, defense electronics, satellites, armaments and aircraft structures.

The deal combines two companies with strong reputations among aerospace vendors, but who have faced difficult times of late due to political gridlock. Orbital and other space-related companies have been hobbled by government cutbacks and contract delays, but the company's small- and medium-class satellite and launch lines are well regarded by the National Aeronautics and Space Administration, as well as other customers.

For ATK, the combination would provide it with Orbital's deep expertise and valuable government contracts, while responding to analyst and investor demand for the company to unlock the value of its fast-growing commercial ammunition business.

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