NEWPORT NEWS SHIPBUILDING BOARD BACKS GENERAL DYNAMICS BID

NEWPORT NEWS SHIPBUILDING BOARD BACKS GENERAL DYNAMICS BID

   Newport News Shipbuilding's board of directors on Wednesday unanimously recommended General Dynamics Corp.'s $67.50-per-share cash offer for all the outstanding shares of Newport News' common stock.

   The board said the $2.6-billion General Dynamics offer provides an opportunity for stockholders “to receive better and more certain value” than under an offer from Northrop Grumman Corp.

   Northrop Grumman has raised concern that a Newport News-General Dynamics deal would “create an unhealthy monopoly, resulting in an unacceptable and anticompetitive consolidation of the U.S. shipbuilding industry, and raise antitrust issues.” A 1999 U.S. Defense Department analysis indicated that more than 75 percent of the total shipyard engineering talent and more than 95 percent of the Navy's research and development investment would be combined in a General Dynamics-Newport News entity.

   However, Newport News' board said it “could not conclude that the Northrop Grumman offer has a greater certainty of completion than the General Dynamics offer, based on information currently available.”

   Newport News, which designs and builds nuclear-powered aircraft carriers and submarines for the U.s. navy, employs about 17,200 people and has revenues of about $2 billion a year.