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NORTHROP GRUMMAN LAUNCHES UNSOLICITED BID FOR TRW

22 Feb 02. Northrop Grumman Corp. launched a $5.9bn unsolicited bid today to buy TRW Inc. (NYSE:TRW – news), aiming to boost its aerospace business only three months after it sealed a deal to buy the country’s only builder of nuclear powered aircraft carriers.
“We believe the strategic combination of Northrop Grumman and TRW will provide tremendous value to the shareholders of both companies,” said Kent Kresa, Northrop Grumman’s chairman and chief executive officer. “Northrop Grumman’s electronics and systems integration capabilities, combined with TRW’s space and systems expertise, would create a strong contributor to the nation’s satellite and missile defense requirements.
Cleveland-based TRW makes space and defense products including spacecraft and satellite technology, defense communications equipment and high-energy lasers.Northrop Grumman would sell TRW’s automotive parts business, which account for 60 percent of the company’s sales, if TRW accepts Northrop’s offer.
Under terms of the offer, Los Angeles-based Northrop is offering $47 in stock for each TRW share, an 18 percent premium over the company’s closing share price of $39.80 Thursday on the New York Stock Exchange. The offer was outlined in a letter dated Thursday to TRW management and released by Northrop on Friday.TRW said in a brief statement that its board would review the proposal to determine what action will serve the best interests of shareholders and other constituencies.
However, it added, “TRW finds it regrettable that Northrop Grumman has chosen to make this proposal immediately following the unexpected departure of its former chief executive officer, David Cote, (See Management on the Move defencejobs.com) and the aberrationally low stock price that resulted.”
The offer comes three days after TRW announced Cote had resigned to take the top job at rival Honeywell International. TRW shares have fallen 5 percent since then, after reaching as high of $45.45 in the last year.
Cote, 49, had served for just over six months as chairman, president and CEO of TRW. He spent 25 years before that in various management and leadership positions for GE.
Northrop has about 100,000 employees in 44 states and 25 countries. TRW has about 94,000 workers.

Comment: Next stop the moon! There is nothing stopping Kent Kresa building Northrop Grumman into the world’s largest defence systems company. TRW provides Northrop with vital land systems technology which includes the huge FBCB2 contract, Guardrail and UAV systems. This acquisition will grow Northrop’s land systems business and take it into the psace arena. TRW has some very advanced space technology which Northrop will have access to develop its ISS segment, taking the technology from UAV thru JSTARS to space.

The weak automotive sector had caused a decline in TRW stock price, making it a target for the ever acquisitive Northrop. Larry Hamilton, Northrop’s PR chief who retires at the end of the month has certainly had an interesting few months and hands over to Randy Belote at a time of high expectations for defense budgets in the US.

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