Northrop rejects TRW proposal

Confidentiality pact called too `onerous' to begin negotiations

April 23, 2002|By BLOOMBERG NEWS

LOS ANGELES - Northrop Grumman Corp. rejected a confidentiality agreement from TRW Inc. yesterday, saying the accord was too restrictive to begin negotiations about its $12.2 billion hostile takeover offer.

The agreement was received Thursday and contained "onerous" restrictions, including a so-called standstill provision requiring Northrop to halt its tender offer, Northrop said in a statement.

TRW did not comment.

Northrop, whose electronics division is based in Linthicum. wants to buy TRW, the No. 8 U.S. defense contractor, to expand its foothold in the military space business, including a missile-defense program. TRW rejected Northrop's $53-a-share offer last week, and said it would open its books to interested buyers, including Northrop.

"It just again seems like another stonewall tactic from TRW to fend off the unwanted overtures from Northrop Grumman," said Robert Norfleet, an analyst with Davenport & Co., who rates Northrop Grumman a "buy" and says he doesn't own the shares.

Shares of Northrop rose $1.92 to $114.16 yesterday and have gained 13 percent this year. Cleveland-based TRW, also the No. 2 maker of automotive air bags, fell 9 cents to $53.51. They have risen 44 percent this year.

Los Angeles-based Northrop said last week that it wouldn't appeal a court ruling that allowed TRW to delay a meeting on the hostile bid, originally set for today, until May 3.

Two Northrop-backed proposals about the hostile bid are scheduled to be discussed at TRW's annual meeting this week in Cleveland.

Institutional Shareholder Services, which advises large investors on shareholder votes involving mergers, called on TRW's board to open talks with Northrop, saying the offer from the fourth-largest defense contractor merits consideration.

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