On April 25, 2001, General Dynamics Corporation(GD) of Fairfax, VA and Newport News Shipbuilding(NNS) of Newport News, VA, announced an agreement under which GD would purchase NNS for about $2.6 billion(including assumption of about $500 million in NNS debt). Pending shareholder and federal regulatory approval, the firms expect the acquisition to be completed by the third quarter of 2001. GD currently owns three of six shipyards that build the Navy's major ships. NNS, an independent, publicly traded firm, is the fourth, and the two remaining shipyards are owned by Northrop Grumman. In 1999, GD withdrew a proposal to purchase NNS that the Department of Defense(DoD) did not support due to concerns over the potential effect of the merger on competition. The current GD proposal raises issues for Congress regarding potential savings from the merger and the potential impact on competition in Navy ship acquisition. This report supplements a 1999 CRS report and will be updated as events warrant.
