Directors of defense contractor Northrop Grumman Corp. approved a plan to spin-off its wholly owned subsidiary, Huntington Ingalls Industries, Inc. (HII), to Northrop Grumman stockholders. The stockholders will receive one share of HII for every six shares of Northrop Grumman stock they hold as of March 30, and the new shares will begin trading the following day.
The value of the transaction has not been determined, and the spinoff plan has not yet been approved by the U.S. Securities and Exchange Commission.
"We have determined that a spin-off of our shipbuilding business will best serve our shareholders, customers and employees. The separation will enable HII and Northrop Grumman to focus more intently on their respective customers," stated Northrop Grumman CEO and president Wes Bush.
Northrop Grumman develops technologies and manufactures systems for aerospace, IT, and electronics in the defense and security segments. Its shipbuilding unit builds nuclear-powered submarines, aircraft carriers, and other warships, but its recent performance has been impaired by the decline in new project assignments from the U.S. Navy, and reportedly from increased competition. Northrop announced last summer that it was exploring strategic alternatives for the shipbuilding holding, and at that time scheduled a 2013 shutdown for its shipyard in Avondale, La.
HII will continue to have shipyards in Newport News, Va., and Pascagoula, Miss., with a total of 39,000 employees.
Prior to the spinoff, a Separation and Distribution Agreement and other agreements will be completed between Northrop Grumman and HII, establishing the final distribution of assets and liabilities.
