Alliant Techsystems Inc. said Wednesday it was conducting a "thorough evaluation" of an agreement to merge its space and defense business with Orbital Sciences Corp. after the explosion of an Orbital unmanned supply rocket.

Orbital's 14-story Antares rocket exploded Tuesday upon liftoff while on a supply mission to deliver cargo to the International Space Station, casting doubt over the deal with Alliant Techsystems, also known as ATK.

Alliant was based in the Twin Cities until 2011, and about 200 people work in the company's former headquarters in Eden Prairie. Alliant also operates the Federal Cartridge ammunition plant in Anoka.

Alliant called the incident an unfortunate failure and did not say when it would conclude its evaluation of the deal.

"There is no specific provision in the merger agreement for a launch failure. … I think things will continue," Orbital Chief Executive David Thompson told analysts.

Alliant shares fell 6.5 percent Wednesday, giving the company a market value of $3.9 billion. Orbital was worth $1.6 billion after its shares plunged 17 percent.

"While significant, the event should not upset the Orbital-ATK combination," Jefferies analyst Howard Rubel said.

In April, Orbital and Alliant struck a complicated deal that they touted as a $5 billion merger of equals. Alliant, the world's largest maker of ammunition, would spin off its sporting gun and ammunition business to its shareholders and merge the rest with Orbital.

The combined company, called Orbital ATK, is to be owned 53.8 percent by Alliant shareholders and 46.2 percent by Orbital shareholders, with Orbital's management expected to run the company.

Reuters