Orbital and ATK’s Aerospace and Defense Groups to Combine in US$ 5 Billion Merger

Dulles, Va., April 29, 2014- Orbital Sciences Corporation today announced that it has entered into a definitive agreement with Alliant Techsystems (ATK), which will combine Orbital and ATK’s Aerospace and Defense (A&D) Groups to create a US$ 4.5 billion (combined calendar year 2013 annual revenue), 13,000-person space, defense and aviation systems developer and manufacturer.

The new company, to be called Orbital ATK, Inc., will serve U.S. and international customers with leading positions in the markets for space launch vehicles and propulsion systems, tactical missiles and defense electronics, satellites and space systems, armament systems and ammunition, and commercial and military aircraft structures and related components. As part of the transaction, ATK will spin off its Sporting Group, which focuses on commercial sporting equipment, to its shareholders. 

The tax-free stock-for-stock merger-of-equals transaction, valued at approximately US$ 5.0 billion based on Orbital’s closing stock price yesterday, will combine Orbital’s small- and medium-class satellite and launch vehicle product lines with ATK A&D’s rocket propulsion, composite structures and space power systems to produce even more capable and affordable space and missile defense products. At the same time, it will enhance ATK A&D’s strategic and tactical missile systems and propulsion, precision weapons and military armament, and commercial and military aircraft programs by leveraging Orbital’s systems design, engineering and integration capabilities to provide greater value-added to current and future customers, acording to a statement issued by both companies. 

David W. Thompson, Orbital’s President and Chief Executive Officer, will be President and Chief Executive Officer of the new company; Blake E. Larson, President of ATK’s Aerospace Group, will serve as its Chief Operating Officer; and Garrett E. Pierce, Orbital’s Chief Financial Officer, will hold the same position in the new company. Other key management positions will be determined prior to the transaction’s closing, with an equitable and balanced selection of senior executives from each company expected in the new organization. 

Orbital ATK will employ about 13,000 people, including over 4,300 engineers and scientists and 7,400 production and operations specialists, at engineering centers, research laboratories, manufacturing facilities, and test and launch sites in 17 states. The combined company will be headquartered at Orbital’s existing Dulles, Virginia campus, with major employee sites in Utah, Missouri, Virginia, Arizona, Maryland, West Virginia, California and Minnesota.

Based on 2013 financial results, the new company would have combined annual revenues of about US$ 4.5 billion, EBITDA over US$ 575 million and total contract backlog more than US$11 billion. Net debt of Orbital ATK at closing is expected to be about US$1.4 billion, after taking into account combined cash balances of approximately $300 million. Annual revenue and cost synergies of $220-300 million are expected by 2016, consisting of US$ 150-200 million of incremental annual revenue and $70-100 million of annual cost reductions.  In the merger, ATK shareholders will own approximately 53.8% of the equity of the combined company and Orbital shareholders will own approximately 46.2%. The combination, which has been unanimously approved by the Boards of both companies, is to be effected in a tax-free “Morris Trust” transaction structure, with a spin-off of ATK’s Sporting Group to its shareholders immediately prior to the merger.

The transaction is expected to close by the end of 2014. 

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