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Boeing CEO McNerney Downplays Speculation About Acquisitions

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Speculation has climbed that Boeing might be interested in acquiring the military aircraft unit of rival Northrop Grumman, but Boeing’s chief executive told investors he’s not inclined to make big purchases. 

Boeing and Lockheed Martin have teamed up to try to win a contract from the Pentagon to build new long-range strike bombers. They’re going up against Northrop Grumman.

Teal Group analyst Richard Aboulafia says if Boeing and Lockheed lose, Boeing faces a big decision.

"Either they can exit the combat aircraft business or they can purchase Northrop Grumman’s aircraft unit," Aboulafia said. 

He says that’s because Boeing combat airplane programs such as the F-15 and F/A-18 will likely wind down in the next four or five years.

But Boeing CEO Jim McNerney says he’s not interested in large acquisitions.

"Much more of an organic growth focus (and) smaller, bolt-on opportunities that complement that," McNerney said at a conference sponsored by the investment bank Barclays. "Much less of a headset, even with cash, to jump into some big acquisition that gets us into a new space."

Northrop’s total market valuation is about $33 billion, while Boeing is valued at about $106 billion. Aboulafia says it’s hard to know how much Northrop's aircraft unit is worth because so much depends on that bomber contract. 

In July 2017, Ashley Gross became KNKX's youth and education reporter after years of covering the business and labor beat. She joined the station in May 2012 and previously worked five years at WBEZ in Chicago, where she reported on business and the economy. Her work telling the human side of the mortgage crisis garnered awards from the Illinois Associated Press and the Chicago Headline Club. She's also reported for the Alaska Public Radio Network in Anchorage and for Bloomberg News in San Francisco.
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