TRW votes to reject takeover attempt

Northrop Grumman officials plan to launch hostile bid in response

March 04, 2002|By LOS ANGELES TIMES

Northrop Grumman Corp. said yesterday it is launching a hostile bid to acquire TRW Inc. for $5.9 billion, after TRW's board rejected earlier in the day an unsolicited offer made 10 days ago.

Northrop said it will take its bid directly to the shareholders by filing a tender offer for TRW with the Securities and Exchange Commission today. Northrop has been preparing for such a hostile bid, anticipating a rejection by Cleveland-based TRW.

Northrop, a Los Angeles-based defense contractor that has grown to become an industry powerhouse, proposed a deal with TRW directors Feb. 21, just three days after TRW's chief executive abruptly resigned to take a top post at another aerospace company.

But TRW directors criticized the timing of the proposal and asked last week for more time to consider it. TRW, a manufacturer of automotive parts and defense satellites and electronics, has been one of the last in the aerospace industry to avoid consolidation.

In a statement, Northrop Chairman Kent Kresa said the company was turning to the shareholders because "we have not received a substantive response from TRW regarding our Feb. 21 letter."

Kresa added that Northrop will request that TRW directors call a special meeting of shareholders required under Ohio law. Moreover, he said the company plans to file a lawsuit in Ohio challenging elements of the state's anti-takeover laws.

Ohio has some of the toughest anti-takeover laws in the nation. It bars shareholders from ousting a staggered board without cause even though hostile bids still have managed to succeed. Analysts have said that the law merely provides more leverage to Ohio-based companies.

Northrop, if it succeeds in acquiring TRW, plans to immediately spin off or sell the company's automotive business, which accounts for 60 percent of sales and a large amount of its debt.

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