Northrop Grumman sweeps up Essex Corp.

Northrop Grumman Corp. has acquired Essex Corp., a provider of signal processing services, for $580 million in an all-cash deal.

The Los Angeles defense contractor will buy all outstanding Essex shares, paying $24 for each common share, and assume the company's debt. The companies expect to close the deal in the first quarter of 2007.

Following the acquisition, Essex of Columbia, Md., will become a business unit within Northrop Grumman's mission systems sector.

The acquisition will expand Northrop Grumman's position in delivering command, control, communications, computers, intelligence, surveillance and reconnaissance capabilities and better serve clients in the intelligence and defense communities, the company said.

Northrop Grumman's acquisition of Essex comes at a good time, because Essex is "one of the best positioned companies heading into 2007," largely because of a recent $160 million refresh of its Thunder signal processing contract for the intelligence community, and its almost exclusive focus on the high-end intelligence market, according to a report issued today by analyst Patrick McCarthy at Friedman, Billings, Ramsey & Co., Inc.

Citigroup Global Markets Inc. was Northrop Grumman's financial adviser on the deal. Jefferies Quarterdeck, a division of Jefferies & Co. Inc., advised Essex.

Essex offers advanced signal processing services and products and IT security solutions to U.S. intelligence and defense communities and commercial customers. It has about 760 employees and reported 2005 revenue of $159.8 million.

Northrop Grumman, which has about 125,000 employees and had 2005 revenue of $30.7 billion, ranks No. 2 on Washington Technology's 2006 Top 100 list the largest federal IT contractors.