September 5, 2012 / 7:08 PM / 6 years ago

More budget cuts might change Pentagon view on mergers: Northrop

Northrop Grumman Corp CEO Wes Bush takes part in the Reuters Aerospace and Defense Summit in Washington September 7, 2011. REUTERS/Kevin Lamarque

WASHINGTON (Reuters) - Further budget cuts could prompt top U.S. defense officials to rethink their current position opposing additional consolidation among top-tier U.S. defense contractors, Northrop Grumman Corp (NOC.N) Chief Executive Wes Bush told Reuters on Wednesday.

Bush said the Pentagon was supportive of mergers and acquisitions of small to medium-sized companies, but had firmly signaled its opposition to mergers among the handful of big prime contractors left after a massive wave of consolidation in the 1990s.

However, he said that position was based on the department’s plan to cut $487 billion from project defense spending levels over the next decade and did not include an additional $500 billion in budget cuts that are due to start taking effect in January.

If lawmakers were unable to reverse those cuts, the department might need to rethink its views, Bush told Reuters.

“The department has taken a certain position today that is reflective of their view of the budget situation. If that is not the reality of the future, then I think they’ll go back and re-look at that,” Bush told Reuters.

He said the ability of U.S. companies to support the Pentagon’s cost-cutting initiatives was closely linked to the overall budget environment. “Ultimately the ability of companies to support the affordability agenda of the department is connected to the market environment.”

Reporting by Andrea Shalal-Esa; Editing by Gary Hill

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