2017.09.1723:28:00UTC+00Northrop Grumman Nears Agreement to Procure Orbital - Source

Defense contractor Northrop Grumman Corp. is near a deal to purchase Orbital ATK Inc. for over $7.5 billion, according to a report from the Wall Street Journal, citing sources familiar with the transaction. An announcement could come as soon as Monday, as stated in the report.

Northrop Grumman declined to comment and Orbital did not immediately respond to a request for comment.

A merger could expand Northrop's portfolio of aerospace and defense electronics while supporting its expertise in composites and rocket propulsion as it goes up against Boeing Co. to replace the U.S. ground-based nuclear defense system.

Northrop is valued at $46.5 billion, while Orbital is valued at $6.3 billion. The acquisition price could not be immediately specified, but could surpass $7.5 billion if a typical premium was attached to it, according to Wall Street Journal.

Orbital competes to lift payloads to space with SpaceX Exploration Technologies Corp.'s Falcon 9 and United Launch Alliance's Atlas family of rockets.

The potential transaction comes as growing tensions with North Korea have put more attention on defense systems.

Northrop Chief Executive Officer Wesley Bush told investors in its second-quarter earnings call in July that he was looking for acquisition opportunities to broaden the contractor's business. It would mark a change in direction for a company that has focused on shareholder returns through stock buybacks and dividends.