Northrop Grumman’s planned $7.8 billion acquisition of Dulles, Virginia-based Orbital ATK will give the defense contractor space launch capability and add to its missile systems portfolio. Announced on September 18, the sale is expected to close in the first half of 2018 assuming Orbital ATK shareholder and regulatory approvals.

Following United Technologies’ planned $30 billion acquisition of Rockwell Collins, announced on September 4, Northrop Grumman’s purchase of Orbital ATK signals a new round of consolidation among aerospace and defense companies and would make Northrop Grumman the fourth largest U.S. defense contractor behind Lockheed Martin, Boeing and General Dynamics, according to Bloomberg.

The pending acquisition, which also calls for Northrop Grumman to assume $1.4 billion in debt, came as a surprise to industry observers. John Bird, Orbital ATK vice president of Washington operations, described the acquisition as a “CEO-to-CEO” agreement that most employees learned of through news accounts the day before the announcement.

“Our two CEOs work really well together,” Bird told AIN during the Air Force Association Air, Space & Cyber Conference this week in National Harbor, Maryland. “I think they looked at this deal and saw an opportunity to bring in some capabilities and get Northrop Grumman into certain market spaces where they had not been previously.

“They’re seven times our size; they’re going to bring an incredible amount of capacity—more investment than a smaller firm can make—to try to develop some of the futuristic concepts that we have,” Bird added.

Orbital ATK is building solid rocket boosters for NASA’s Space Launch System, a new heavy-lift launch vehicle that will carry the Lockheed Martin-led Orion multi-purpose crew vehicle into space for the first time in 2019. The company also builds commercial and government satellites and propulsion and control systems for tactical missiles and missile defense interceptors. At the Air, Space & Cyber Conference, a “counter-UAS” system that intercepts drones was among the company’s featured products—according to Bird, the system combines a steerable airburst round with pulsed laser detection.

New propulsion and controls for missiles will complement Northrop Grumman’s missile systems business, which supports the U.S. Air Force’s intercontinental ballistic missile (ICBM) program. In late August, the service awarded Northrop Grumman and Boeing contracts to mature their designs for the Ground Based Strategic Deterrent program, which will replace the Minuteman III ICBM system as the ground-based component of the U.S. nuclear triad.

Plans call for Northrop Grumman to reestablish Orbital ATK as a fourth business sector, joining its current aerospace systems, mission systems and technology services sectors.

“The unique alignment in culture and mission offered by this transaction will allow us to maintain strong operational performance on existing programs while we pursue new opportunities that require the enhanced technical and financial resources of a larger organization,” said David Thompson, Orbital ATK president and CEO.