Perhaps this news doesn't have much to do with current space prizes, but the historical involvement of one company with the Ansari X PRIZE and the other with the Lunar Lander Challenge are well known.
There are reports that Northrop Grumman has bought 100% of Scaled Composites. They are increasing their stake from 40%. The reports don't have many more details than that so far. As a result, the implications are even less clear than usual. Will NG have a "hands-off" management style? Will they try to merge the large aerospace cost-plus culture with the small entrepreneurial culture? Will Scaled be able to make its own decisions? How will the Scaled employees react? Will Scaled benefit from access to more customers, lawyers, HR, R&D money, etc? Is anyone getting rich on the deal? What does it mean to the entrepreneurial space industry in general - will investors see the possibility of buy-outs as being more likely, and therefore invest more in space startups?
There are plenty of examples where this kind of merger has taken the value right out of the little company (I'm sure you can think of cases in the aerospace world, the computer software world, etc). However, if handled properly, with an understanding of the strengths and weaknesses of both sides, and what each can offer the other, it could be a win for everyone. Probably more than any of the other large aerospace companies, Northrop Grumman has already taken a big interest in the entrepreneurs, not only with their Scaled interactions but also with sponsorship of the Lunar Lander Challenge and Zero-G rides for teachers.
Personal Spaceflight has an article on this with a comment from Dr. Thomas Matula.
MSNBC provides some background.
LiveScience reports that a Northrop Grumman media person says "the equity change will have no impact on development of the SpaceShipTwo suborbital vehicle. There are to be no differences at all in the on-going work at Scaled with aerospace primes or jobs it does in its commercial programs". He also said “The partnership between Scaled Composites and the Virgin Group on The Spaceship Company is unchanged by the transaction. Certainly, Burt will remain at the helm and lead Scaled Composites…and the entire management team will remain. It will continue in its current operating model as a separate entity within Northrop Grumman”.
Will that arrangement continue to hold over the long run, as pressures on both sides lead to changes?
RLV News has a post with numerous comments.
Update (July 23): Selenian Boondocks and Transterrestrial Musings has some analysis of the event.