The battle for control of Grumman Corp. took a strange turn yesterday when Northrop Corp. said it was prepared to raise its bid to $62 a share from $60, but only if it agreed to a merger offer within 24 hours.
Northrop's surprise move puts the Los Angeles-based company in the unusual position of bidding against itself, because its previous offer of $60 a share was already $5 higher than Martin Marietta Corp.'s only bid.
Northrop's latest strategy was viewed by analysts as a move to force Grumman to change the bidding rules it has established for winning control of the company in favor of a more open and public bidding procedure.
Grumman, which quickly rejected the open auction proposal, has been seeking a closed auction, having imposed a deadline of 5 p.m. today for the two companies to submit their best and final bids.
In a letter to Grumman's board of directors, Kent Kresa, Northrop's chairman and chief executive, said Northrop would raise its tender offer to $62 a share until 3 p.m. EST today. "If Grumman has not accepted our offer by agreeing to enter into the proposed merger agreement with Northrop by such time," Mr. Kresa wrote, "the offer will expire and Northrop's existing $60 offer . . . shall remain in effect in accordance with its terms."
Mr. Kresa noted that Martin Marietta has had more than two weeks to consider a response to Northrop's bid, and "it is not fair now to foreclose Northrop from submitting a further bid if Martin Marietta elects to increase its price."
Under Mr. Kresa's proposal, both bidders would have the opportunity, within 24 hours, to respond to the other's offer.
On March 7, Martin Marietta reached an agreement with Grumman to acquire the Bethpage, N.Y., company for $1.93 billion, or $55 a share. Three days later, Northrop proposed buying Grumman for $2.04 billion, or $60 a share.
In rejecting Northrop's latest proposal last night, Grumman directors advised Northrop to stick to the rules and participate in the bidding process.
But Grumman's biggest single shareholder -- an employee trust fund that owns 30 percent of the company's outstanding shares -- endorsed the proposed Northrop offer, the Associated Press reported.
The trust fund's adviser, Rothschild Inc. senior managing director Wilbur Ross, said Grumman should get Martin Marietta to at least match $62 a share.
