Pentagon still cold to big defense mergers: Northrop CEO

Wed Jan 21, 2015 6:04pm EST
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By Andrea Shalal

WASHINGTON (Reuters) - Even in an era of shrinking U.S. military spending, the U.S. Defense Department remains reluctant to see further consolidation among big U.S. weapons makers, Northrop Grumman Corp (NOC.N: Quote) Chief Executive Wes Bush said on Wednesday.

"I haven't seen any evidence that the department is thinking about things differently, but it will always come down to the case-by-case view of competition versus the benefit that the department would get from it," Bush told Reuters after a speech at the Brookings Institution, a Washington think tank.

Pentagon officials, who would have a role in reviewing any large defense mergers, have repeatedly said they are comfortable with the current number of large prime contractors, although they expect mergers and acquisitions among smaller players.

Bush said Northrop remained focused on augmenting its capabilities in targeted areas. "I'm excited about growing our company with what we have," he said. "We get the biggest return on the things we do inside the company."

On Tuesday, Northrop, the third largest U.S. defense contractor, announced it had hired Brett Lambert, a former top U.S. defense official and expert on mergers and acquisitions, to oversee corporate strategy.

Analysts said Lambert's hiring reflected growing pressure on Northrop to boost revenues after several big contract losses, and could help the company the navigate a future merger.

Bush declined to provide details about the company's plans. He said Lambert was a "smart guy" suited to help the company shape its strategy.

In remarks at a Brookings conference on the U.S.-Australia alliance, Bush said he thought a slew of mergers triggered by the previous downturn in the defense sector in the late 1990s had made sense.   Continued...

Northrop Grumman Chairman and CEO Wes Bush speaks during a news conference on national security at the National Press Club in Washington December 3, 2012. REUTERS/Yuri Gripas