1 May 02. TRW Inc. (NYSE: TRW – news) issued the following statement in response to Northrop Grumman Corporation’s (NYSE: NOC – news) misstatements regarding its negotiations with TRW referenced in Northrop’s press release issued on May 1st.
“TRW is increasingly dismayed that it is forced to correct Northrop’smisstatements in the press. We believe Northrop’s public statementsreleased today were misleading and mischaracterize the dialogue betweenour two companies.As TRW has stated many times, it would like Northrop to participate in theBoard’s process, but at the same time, TRW must ensure that itsconfidential information is protected for the benefit of TRW shareholders.As Northrop is well aware, TRW and Northrop have been in almost dailycommunications both by phone and letter over the past week. In fact, atTRW’s Annual Meeting on Wednesday, April 24, 2002, TRW invited Northrop tosit down and discuss the terms of a mutually agreeable confidentialityagreement, but Northrop and its representatives declined to do so.TRW’s commitment continues to be to deliver full value to TRWshareholders. While TRW hopes to be able to work with Northrop,statements like those made today by Northrop continue to thwart theprocess.”
TRW noted that a 1997 Confidentiality Agreement entered into between TRW and Northrop contained a two-year standstill provision at Northrop’s insistence. Just yesterday, William B. Lawrence, Executive Vice President, General Counsel and Secretary of TRW, sent the following letter to W. Burks Terry, Northrop’s Corporate Vice President and General Counsel:
April 30, 2002
W. Burks Terry, Esq.
Corporate Vice President and
Northrop Grumman Corporation
1840 Century Park East
Los Angeles, CA 80067-2199
Thank you for your letter of April 29th and the markup of the revised confidentiality agreement which we provided to you. As you correctly recognize, the key open issue is the length of the standstill period. You state in your letter as follows: “We are prepared to stand still for a period that reflects the length of time that our experience shows could allow us to complete due diligence and negotiate and sign a definitive agreement.” You further state: “An unreasonable stand still period, given the current circumstances, is not in the best interests of anyone, particularly the TRW shareholders.”
The fact of the matter is that, given the current circumstances, the standard you propose for the standstill period simply doesn’t work for the TRW shareholders. As you know full well, TRW’s Board has made clear that we are embarked on a path to develop the best value we can for our shareholders. This path involves both pursuit of our announced Value Enhancement Plan and, concurrently, seeking a strategic alternative that could provide even greater value. The standstill provision in our confidentiality agreement—which has been executed by several interested parties—is directly tied to the creation of value from both of these alternatives. Simply put, we want parties who obtain confidential, business sensitive information from TRW to be committed to bidding for the company within the process we have established and at their highest and best price. We believe that this will maximize the sale value of the company. The standstill time frame you are suggesting would not serve that objective. Rather, it would permit each party to game the system, and disincentivize bidding. Moreover, if no satisfactory bid results, it is critical that the Value Enhancement Plan be given the opportunity to develop the value inherent in it, and not be short-circuited by a unilateral bid on a near term basis.
Hopefully, this will give you a clear understanding of why we do not accept the approach you have proposed. Having said that, I believe that we can addre