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Northrop Grumman Buying Qantas's Defense Unit

Thursday - 8/29/2013, 2:16pm  ET

Newsflash: Northrop Grumman has just announced that it is buying Qantas Airways' defense business. (Newsflash No. 2: Qantas Airways has a defense business? )

Apparently so. And on Wednesday, Northrop confirmed that its Northrop Grumman Australia Pty Limited subsidiary has agreed to buy Qantas Defence Services Pty Limited for an undisclosed sum.

According to its website, Qantas Defence Services, or QDS, "has a long and proud history of supporting Australia's defence forces predating World War II, when it first performed maintenance and modification work on airframes and engines." Its 500 employees currently support "a range of major Australian Defence Force capability systems including the Lockheed C-130H Hercules and P-3 Orion, the Boeing B737-700IGW and Bombardier Challenger CL604 Special Purpose Aircraft, Sikorsky S-70A-9 Black Hawk, BAE Hawk 127 and the EADS CASA KC-30A Multi Role Tanker Transport."

Northrop said in a statement that acquiring QDS complements our current integrated logistics and modernization efforts and advances our international strategy," simultaneously "underscoring our commitment to the Australian and regional defence markets."

QDS puts its annual revenues at just more than U.S. $125 million, which if valued at the 0.85-times-sales ratio applied to Northrop's own shares, for example, would suggest a transaction value of roughly $106 million.

Regulators permitting and shareholders approving, the acquisition is slated to take place sometime next year.

This article was originally published as Northrop Grumman Buying Qantas's Defense Uniton Fool.com

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