Jet manufacturer, Northrop Grumman end joint venture: Amsec, which provides support for the U.S. Navy, will be divided.

Most companies probably wouldn't walk away from an investment that grew five times its size in under a decade. But Northrop Grumman Corp. isn't most companies.

Los Angeles-based Northrop Grumman, the world's largest shipbuilder, and Saic Corp., a San Diego-based jet manufacturer, announced last week they will break up Amsec LLC, a $500-million joint venture that provides engineering and technical support services for the U.S. Navy.

The venture had grown tremendously since going public in 2000, when it reported revenue of $100 million. But for the Los Angeles defense contractor, which generated some $30 billion last year in revenue, the partnership apparently wasn't worth the trouble.

Paul Nisbet, an analyst with Newport, R.I.-based JSA Research, said the joint venture may have made sense in the beginning. It allowed the companies to secure various contracts, but over time the two companies may have wanted to take it in different directions.

"Rather than having a joint ownership where each is compromising to the other's desires, I think it's just a matter of better control for both firms," he said. "And rather than being part of Saic, then they can do what they want with it rather than what Saic wanted with it."

Irwin Edenzon, vice president of technology development and fleet support for Northrop, echoed that analysis, characterizing the partnership as "very, very successful" but noting the two companies have different "strategic objectives.

"It was a very amicable process," Edenzon said of the dissolution. "Both organizations have a very clear understanding of where they want to go in the future."

Amsec is not dead in the water, though. Instead, the companies plan to sprit the venture along existing customer and product lines.

Northrop's Newport News division will retain the Amsec name and continue handling the ship engineering, technical services and logistics, which pulls in about $200 million in annual revenue. Saic, which had held a majority stake in Amsec, will get the aviation side of the business.

"We now look forward to the increased ability to focus on our core business areas of command, control and communications," said Deborah Alderson, president of Saic's Defense Solutions Group, in a statement.

The breakup didn't shake up either company's stock price. In particular, Northrop closed up about 1 percent to $76.53 for the week ended June 13.

The breakup is expected to be completed by mid-July.

Staff reporter Richard Clough can be reached at [phone], ext. 251, or at [e-mail].