UPDATE 4-Northrop to sell $1.65 bln unit to private equity

* Northrop agrees $1.65 billion deal to sell TASC

* Follows spate of private equity deals (Adds comment on deal price in paragraph 5, second byline)

By Megan Davies and Jui Chakravorty Das

NEW YORK, Nov 8 (Reuters) - Defense contractor Northrop Grumman (NOC.N: Quote, Profile, Research) has agreed to sell its TASC consulting unit to two buyout firms, General Atlantic and Kohlberg Kravis Roberts & Co [KKR.UL], for $1.65 billion, the companies said on Sunday.

The deal is the latest in a spate of buyouts, as the financing markets improve. On Thursday, the biggest leveraged buyout of the year was signed, when private equity firm TPG and the Canada Pension Plan struck a $4 billion deal to buy IMS Health Inc (RX.N: Quote, Profile, Research).

Northrop hired investment banks to sell the unit, which advises government military agencies, a few months ago, drawing interest from a number of private equity firms.

Sources told Reuters in September that a sale, originally expected to fetch about $2 billion, would more likely be around $1.5 billion.

The deal price is "in line with expectations" for that sub-sector, said an investment banker who declined to be identified.

The deal is expected to be completed in the fourth quarter.