There’s a new player in Washington’s aerospace sector.
Arlington-based Alliant Techsystems is merging its aerospace and defense segments with Orbital Sciences, the Dulles-based commercial space firm, the companies said in a joint announcement Tuesday. ATK is also spinning off its lucrative hunting gear segment into a separate company.
The move is mutually beneficial, company executives said, as ATK looks to bolster its aerospace business and Orbital Sciences hopes to boost the scale of its existing operations as well as gain a foothold in the defense sector.
The separation of ATK’s core segments gives it the opportunity to focus on its sporting goods sector, which has grown to a $2.2 billion business through several mergers and acquisitions over the past decade. The company manufactures commercial sporting equipment for hunters, shooters and law enforcement agencies.
Another beneficiary of the merger is NASA, a client of both companies.
Last year, Orbital successfully completed a supply run to the international space station using its Antares rocket and Cygnus spacecraft. Orbital’s expansion after the merger will make it a bigger player in the commercial space sector as it competes with the likes of SpaceX, billionaire entrepreneur Elon Musk’s company, said Howard Rubel, an equity research analyst at Jefferies.
In a call with investors, executives from both companies said they would use the deal to build on existing technological capabilities. ATK is not a stranger to the space sector. The company received a $178 million contract from United Launch Alliance this month to deliver hardware for the Atlas V and Delta IV rockets.
Under the terms of the deal, ATK and Orbital will merge to form a new company named Orbital ATK with a combined revenue of $4.5 billion.
Orbital ATK will be headquartered in Dulles and is expected to employ 13,000 people in 17 states. The hunting-gear company will be based in Utah and employ 5,800 workers in 11 states and worldwide, ATK said.
The companies did not specify how many positions would be eliminated but noted that Orbital ATK expects to save up to $100 million as it streamlines operations. After the merger, which is expected to be completed by the end of 2014, ATK shareholders will own 53.8 percent of Orbital ATK.
The Virginia companies have worked together for more than two decades, making them familiar with each other’s capabilities and work culture, Ronald Fogleman, chairman of ATK’s board of directors, said in a statement.
“The combination of ATK and Orbital really does bring together two companies that have historically been very innovative in their markets and been focused on affordability,” David Thompson, Orbital’s chief executive, said in the call.
Fogleman will continue his role for Orbital ATK, while David Thompson will serve as its president. Mark DeYoung, ATK’s current president and chief executive, will lead the sporting-goods company.
Shares of Orbital Sciences jumped 16 percent to close at $30.96 while ATK closed up 6.7 percent at $148.22.
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