U.S. defense contractor Northrop Grumman said on Monday it would buy missile and rocket maker Orbital ATK for about $7.8 billion in cash, with plans to establish a new, fourth business sector.

Orbital has billion-dollar contracts with NASA as well as the U.S. Army.

The deal, expected to close in the first half of 2018, comes as the firing of missiles by North Korea in recent months has focused attention on missile defense systems.

Northrop’s offer price of $134.50 per Orbital share represents a premium of 22 percent over the stock’s Friday close.

Orbital’s shares were trading at $131.70 before the bell.

On a pro forma basis, Northrop said it expects 2017 sales of $29.5 billion to $30 billion.

Northrop will assume $1.4 billion in Orbital’s net debt as part of the deal, the companies said.

Reuters on Sunday reported about the potential deal, citing a person familiar with the transaction.

Perella Weinberg Partners is the financial adviser to Northrop while Citigroup is advising Orbital.