Like the accounting industry, selling products and offering consulting services creates conflicts. Northrop Grumman offers both services to government agencies, particularly U.S. Homeland Security and the military. The U.S. (and other countries) have new guidelines and regulations, resulting in Northrop Grumman announcing that it is selling its consulting group TASC.
Northrop Grumman, one of the largest suppliers to U.S. military has sold the division to Kohlberg Kravis Roberts (KKR) and the Atlantic Group for $1.65 billion.
Ronald D Sugar is notes that this is in the best interests of Grumman Northrop;
This transaction is in the best interest of Northrop Grumman's customers, employees and shareholders," said Ronald D. Sugar, chairman and chief executive officer. "It reflects Northrop Grumman's desire to align quickly with the government's new organizational conflict of interest standards, while preserving TASC's unique organizational culture and its status as the advisory services employer of choice. TASC is a remarkable organization with a proud 43-year heritage of supporting critical national security missions. We are confident the investors understand the critical importance of its customers' missions and the depth and sophistication of its employees' expertise."
TASC has revenues of $1.6 billion. The deal is expected to close by the end of the year with the cash going to buy back its stock.