NEW YORK (AP) — Defense contractor Northrop Grumman Corp. said Tuesday its board has approved the expected spin-off of its shipbuilding business to stockholders, following nearly a year of mulling alternatives for the struggling unit.
Under terms approved by the board, Northrop Grumman stockholders will receive one share of the shipping business, Huntington Ingalls Industries Inc., for every six shares of Northrop Grumman stock they hold on March 30.
Shares of the shipbuilding business will begin trading under the symbol “HII” the next day.
The unit has struggled from a slowdown in Navy shipbuilding contracts and increased competition from rivals like General Dynamics Corp. Northrop and other defense contractors have also been under pressure from the Pentagon to cut costs, forcing them to shrink.
When Northrop, which is based in Los Angeles, said in July it would explore strategic alternatives for the unit, it also announced the planned closure of its main Louisiana shipyard. The Avondale facility in Louisiana is slated to close by 2013. Besides Avondale, Northrop has major shipyards at Newport News, Va., and Pascagoula, Miss. The shipbuilding unit has about 39,000 employees. The Pascagoula yard competes with Bath Iron Works in Maine for destroyer contracts from the U.S. Navy.
Northrop is one of the Navy’s main sources of nuclear powered submarines, aircraft carriers and other warships. Shipbuilding accounts for about one-fifth of Northrop’s total revenue.
The new name, Huntington Ingalls Industries Inc., incorporates the history of Northrop’s ship business, which is the successor to Newport News Shipbuilding, founded by Collis P. Huntington in 1886, and Ingalls Shipbuilding, created in 1938.