By Calvin Biesecker

Northrop Grumman [NOC] yesterday said its board of directors has approved the spin-off of its shipbuilding operations to company stockholders subject to final approval from the Securities and Exchange Commission.

If all goes to plan, Northrop Grumman shareholders will receive one share of common stock in Huntington Ingalls Industries (HII) for every six shares of Northrop Grumman common stock they hold on the March 31 distribution date. Any fractional shares will be aggregated and sold in the open market with the proceeds being distributed ratably in the form of cash payments to Northrop Grumman shareholders who would have received a fractional share of HII stock.

The share disbursements will be tax-free to Northrop Grumman shareholders although any cash they receive for fractional shares will be taxable.

There will be no change to the trading of Northrop Grumman’s stock on the New York Stock Exchange (NYSE). Stock in HII will begin “when issued” trading on the NYSE on March 22 under the ticker symbol HII WI and then on March 31 it will trade under the symbol HII once “regular-way” trading begins. When-issued refers to trading of a stock before it has been officially issued. Transactions are formally settled after the stock has been issued.

Northrop Grumman last year announced plans to divest its shipbuilding operations with the spin-off as the preferred alternative as the best way to reward its shareholders. The shipbuilding operations include facilities and property in Newport News, Va., Pascagoula, Miss., and Avondale, La., employing about 38,000 shipbuilders. HII will be the largest private employer in Mississippi and Louisiana and the largest manufacturing employer in Virginia, according to information HII distributed to Congress.

In addition announcing the divestiture, Northrop Grumman last year also said it would discontinue operations in Avondale in 2013 as work there winds down and would consolidate its Gulf Coast shipwork in Pascagoula.

In the note to Congress yesterday, HII didn’t mention anything about plans at Avondale other than to say “Huntington Ingalls management is committed to the investments necessary in workforce, processes and facilities necessary to ensure our capabilities match or exceed U.S. Navy’s requirements.”

HII also mentioned some of the new programs it will be focusing on, including becoming a subcontractor for the design and engineering of the next class of ballistic missile submarine and the builder for the new class of amphibious assault ship, the LSD(X), which will follow the LPD-17 and LHA-6 class of vessels.