Deal for Northrop's TASC unit inches closer-source

24 October 2009 @ 04:28 pm EDT

Private equity firms Kohlberg Kravis Roberts & Co and General Atlantic are moving closer to a deal to buy Northrop Grumman's TASC unit, a source familiar with the situation said on Friday.

Undated artist rendition provided by Northrop Grumman shows an aerial tanker refuelling an F-18 fighter. Shares in EADS soared on March 3, 2008 after the European aerospace group won part of a $35 billion deal to supply 179 aerial tankers to the Pentagon in a shock defeat for U.S. rival Boeing. The U.S. Air Force announced the award late February 29, 2008 after a lengthy contest between Boeing and a European-American team led by U.S. defence cont...

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The defense contractor hired investment banks to sell the unit, which advises government military agencies, a few months ago, sources previously told Reuters.

A number of private equity firms have been interested in the unit, but KKR and General Atlantic are now likely to be the winner, the current source said.

Northrop, which has never confirmed it is selling the unit, declined comment. KKR and General Atlantic also declined comment.

The source, speaking to Reuters but who couldn't be identified because the deal is yet to be announced, said while a deal was getting closer, the situation remained fluid and a deal was not guaranteed. It was unclear what the price is likely to be.

Sources told Reuters in September that a sale, originally expected to fetch about $2 billion, would more likely be around $1.5 billion.

Bloomberg earlier reported that the pair could reach an agreement as soon as next week to buy the unit for $1.5 billion to $2 billion.

(Editing Bernard Orr)