TRW Tries To Outflank Northrop As Hostile Bid Faces Test

SPACEMART

A big laser beam at TRW

New York (AFP) May 2, 2002
TRW was scrambling to shore up its defense against against a hostile offer by Northrop Grumman that would create a powerhouse military contractor ahead of a key test Friday at a shareholder meeting.

In the latest volley, Cleveland, Ohio-based TRW said Wednesday that Northrop was using "misstatements" in an effort to sway TRW shareholders to keep its 6.7 billion-dollar offer alive.

TRW, an aerospace and auto parts manufacturer coveted for its anti-missile laser defense technology, has been maneuvering to stay independent, or at worst, spin off parts of the company to prevent the Northrop acquisition.

Northrop has been campaigning fiercely to win over TRW shareholders in its bid to become the largest US defense firm in revenues and the second-largest military contractor.

But to keep its bid alive, it must win shareholder permission under Ohio law to acquire more than 20 percent of the firm.

Northrop Grumman recently boosted its offer to 53 dollars per share, up from 47 dollars offered earlier, and accused TRW's board of directors of ignoring the interests of shareholders in rejecting a merger.

The two firms have been battling over whether to allow Northrop to obtain sensitive TRW financial information to pursue its bid.

"TRW is increasingly dismayed that it is forced to correct Northrop's misstatements in the press," the firm said Wednesday. "We believe Northrop's public statements released today were misleading and mischaracterize the dialogue between our two companies."

TRW said it is studying various options "to deliver full value to TRW shareholders," including exploring deals with other as-yet unnamed firms.

California-based Northrop meanwhile sent a letter to TRW shareholders urging them to support the bid and denouncing TRW tactics.

"A negotiated merger in which Northrop Grumman pays full and fair price for TRW has always been our goal," Northrop said. "TRW's tactics, however, have caused us to question whether it is truly interested in exploring any Northrop Grumman proposal as an opportunity to maximize value for TRW shareholders."

Northrop said its 53 dollar per share offer "represents a significant premium to TRW's historical trading levels" and that a takeover would help both firms "from synergies and cost savings achieved as the new company recognizes the benefits of integration."

The Northrop statement said that in trying to stay independent, TRW is considering selling off a "premier asset," its aeronautical systems unit, that would be kept under a merger.

TRW's plan uses "some very optimistic assumptions and necessitates several risky steps before it delivers any value to shareholders," Northrop said.

"The sale of Aeronautical Systems by TRW is a process designed to maximize expediency rather than value. TRW is planning on selling Aeronautical Systems in the midst of a severe downturn in its core commercial aerospace business. Northrop Grumman, however, would not be forced to sell this premier asset immediately."

TRW countered that it has boosted earnings 20 percent in the first quarter of 2002 and has won a number of key contracts.

"We are keeping our eye on the ball when it comes to running our businesses," TRW told its shareholders, adding that Northrop's bid is "inadequate" and "highly conditional."

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TRW WATCH

TRW Keeps Heat On Northrop, Opens Books To Other Suitors

Cleveland, (AFP) Apr 29, 2002
Defence contractor TRW lobbied its shareholders to reject a hostile takeover bid by Northrop Grumman Corp. Monday ahead of a critical May 3 shareholder meeting.

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