Northrop risks ire of Martin Marietta


March 19, 1994|By Ted Shelsby | Ted Shelsby,Sun Staff Writer

You have to admire Kent Kresa's courage.

In going up against Martin Marietta Corp. in a hostile bid for Grumman Corp., the chairman of Northrop Corp. is taking on one of the combatants in what has been called the most fiercely fought takeover battle in the military history of corporate America.

It was Martin Marietta vs. Bendix Corp. in the summer of 1982 and it was a classic. The investment community still talks about it the way fight fans recall the 1975 "thriller in Manila" between Joe Frazier and Muhammad Ali.

It was during the battle with Bendix that Martin Marietta made famous the "Pac-Man" -- I'll gobble you up before you can gobble me up -- defense.

It went something like this: Bendix launches a surprise attack on Martin Marietta in the form of a cash and stock offer valued at well over $1 billion.

Five days later, Martin Marietta fires back in a move that some Wall Street analysts called brilliant. It turned the tables on Bendix by announcing its own plan to take over the Michigan-based electronics company.

For a month the two slugged it out in the courts, where Maryland's law on corporate takeovers was struck down, and in the boardrooms. It ended when a third party, Allied Corp. (now Allied Signal Inc.) moved in and began to unravel the situation by acquiring Bendix and a minority interest in Martin Marietta.

If there was a lesson to be learned from the encounter, it was summed up in the flag that Martin Marietta was flying at its headquarters in Bethesda at the conclusion of the takeover battle. Flying between the U.S. and Maryland flags was a replica of the Colonial flag with a snake and the motto: "Don't Tread on Me."

There is no indication, at this time anyway, that the squabble between Northrop and Martin Marietta will escalate to the level of the Bendix fight, but some analysts have speculated that Martin Marietta might go after Northrop. Martin Marietta officials decline to discuss the company's plans.

Martin Marietta was not happy that Northrop topped its $55-a-share bid for Grumman with its own $60 offer, and publicly stated as much. A harshly worded statement from Martin Marietta said, in part, that "the attack by Northrop degrades the entire character of the rational consolidation taking place within the United States' national security industrial base."

Since the statement there has been very little action from any of the parties involved.

On Tuesday, Grumman said that it had postponed its scheduled April 21 annual meeting of stockholders. No new date has been set for the meeting.

In somewhat of a surprise, the next day Mr. Kresa said that he was ready to consider offers for Northrop. "If there is a serious bid for us, we would look at it," he told Bloomberg Business News.

Mr. Kresa declined to comment on the likelihood that another company might make a bid for Northrop or that Northrop might launch its own pre-emptive bid for Martin Marietta.

On Thursday, Grumman said that trustees of its employee stock plan, which controls about a third of Grumman's stock, had hired consultants to evaluate the offers.

The trustees can determine how the stock in the plan is tendered or they may pass the right on to each of the participants in the plan.

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