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Northrop Grumman To Query Share Holders In Hostile Bid For TRW

Northrop maintains that its 47 dollar-per-share offer is 22 percent above the average trading price for TRW stock for the last 12 months and four percent over the highest closing price for the last year.
Los Angeles (AFP) March 4, 2002
Northrop Grumman increased Monday the pressure of its hostile bid for technology and aerospace manufacturer TRW, saying it plans to make a direct appeal to company shareholders to accept its terms.

Northrop Grumman is vying to muscle its way to the top of the defense industry with the takeover, worth about six billion dollars.

Rejection of the offer by TRW late Saturday prompted the Los Angeles-based Northrop Grumman to employ more aggressive tactics.

"We are moving ahead to make this offer available to TRW shareholders," said Kent Kresa, chairman and chief executive officer of Northrop Grumman, in a press release.

He said that Northrop would request that the board of directors at the Cleveland, Ohio-based TRW call a special meeting of shareholders -- required under Ohio law -- to authorize its acquisition of TRW shares.

"We expect that the TRW shareholders will respond favorably," Kresa said, adding: "We continue to believe that such a transaction would be in the best interests of both companies' shareholders."

Northrop maintains that its 47 dollar-per-share offer is 22 percent above the average trading price for TRW stock for the last 12 months and four percent over the highest closing price for the last year.

For its part, Cleveland, Ohio-based TRW announced in a statement late Sunday that its board of directors had unanimously rejected Northrop Grumman's proposal, which it deemed "financially inadequate."

TRW noted that on Friday the company's stock price had closed at 50.05 dollars per share -- more than three dollars per share higher than Northrop Grumman's proposal.

"This is all about shareholder value," said Philip Odeen, TRW's chairman, who added, "the Northrop Grumman proposal does not begin to recognize the value of TRW's franchise."

A March 3 letter from Odeen to Kresa went on to decry the proposal as "an opportunistic attempt to acquire one of the industry's leading space and electronics and systems businesses at a time when TRW's stock price was temporarily depressed after the sudden departure of David Cote, our former chairman, president and chief executive officer."

Cote announced his surprise departure February 19 to become chief executive at Honeywell.

Analysts said the proposed merger could benefit both firms, especially TRW, which has been struggling in some sectors.

Combining the two firms would create a giant with sales of approximately 27 billion dollars, excluding TRW's automotive business, to be split off by Northrop if the deal goes through.

The marriage would push Northrop ahead of Lockheed-Martin, which posted 24 billion dollars in revenues last year, in the ranks of defense industry titans.

The merger also would give Northrop access to TRW's coveted laser technology to be used in space-based systems to track and destroy enemy missiles -- technology likely to be expanded by the administration of President George W. Bush.

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Northrop Grumman Offers $47 For TRW Common Stock
Los Angeles - March 3, 2002
Northrop Grumman announced Sunday that it has commenced an exchange offer for all outstanding shares of common stock and preference stock of TRW Inc. Each share of TRW common stock may be exchanged for a number of shares of common stock of Northrop Grumman equal to $47.



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