Northrop Grumman (NOC) has obtained approval from its shareholders to pursue the acquisition of Orbital ATK (OA) in what is a $9.2 billion deal. While the deal still has to be officially approved, shares of Northrop traded with gains of 3% in response to the deal announcement, in a move that added $1.4 billion to its market value.

I understand the rationale behind the deal, both the strategic and financial motives, yet believe that the market is getting a bit too enthusiastic about it. Shares of Northrop have hit fresh highs and trade at a premium to the market, while leverage ratios are very high, especially if you take pension liabilities into account.

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