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TRW Digs In Its Defenses Over Northrop Grumman Bid
TRW dug in its defenses Wednesday against a hostile offer by Northrop Grumman, saying that a sweetened 6.7 billion-dollar offer was still "financially inadequate." The announcement was the latest in a series of refusals by TRW, an aerospace and auto parts manufacturer, aimed at fending off a hostile bid by Northrop that would create the largest US defense contractor. Northrop Grumman recently boosted its offer to 53 dollars per share, up from the 47 dollars offered earlier, and accused TRW's board of directors of ignoring the interests of shareholders in rejecting a merger. But TRW said it decided on the latest bid "after careful consideration, including consultation with independent financial and legal advisers." The bid "is financially inadequate and not in the best interests of TRW's shareholders," TRW said in a statement. "Accordingly, the Board of Directors strongly recommends that TRW shareholders reject Northrop's offer and not tender their shares for exchange." TRW said Northrop's revised offer "continues to undervalue TRW's businesses and its opportunities" and claimed its own strategic plan to accelerate debt reduction and separate its automotive and defense businesses could deliver more value than the Northrop bid.
TRW shares jumped 2.8 percent to 53.85 dollars at the close of trade Wednesday. TRW separately reported a 20 percent increase in first-quarter operating earnings per share and increased its guidance for full year 2002, crediting both the strengthening US economy and the company's restructuring actions and improved productivity. "The company is moving quickly to improve its results to help fight off unwanted merger advances from Northrop Grumman," said Morningstar analyst Josh Peters. TRW net earnings for the first quarter were 91 million dollars, or 71 cents per share -- a 17 percent increase from the same quarter of 2001. Northrop Grumman itself reported first-quarter net income of 149 million dollars, or 1.27 per share, compared with 132 million, or 1.81 per share, for the same period of 2001. The comparable per-share decline reflects a decrease in pension income and increases in interest expense and in the number of shares outstanding. "We are excited about our proposed acquisition of TRW. Its space and satellite business perfectly complements our defense capabilities," said chairman and chief executive Kent Kresa. "Based on our demonstrated ability to successfully integrate acquired companies, we expect a completed transaction will lead to enhanced value for our shareholders." Although it rejected the Northrop bid again, TRW said it was exploring "all strategic alternatives" and was willing to share some confidential information with those interested in acquiring some parts of TRW. Northrop, which has so far been turned away from such requests, would be able to participate in this process "on the same basis as other parties," based on confidentiality agreements. In response to this, Northrop Grumman said it is optimistic it will be able to promptly begin a review of non-public information concerning TRW. Kresa said: "We have been asking for the opportunity to conduct a normal due diligence review of TRW since February, when we first proposed an acquisition." All rights reserved. � 2002 Agence France-Presse. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by Agence France-Presse. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of Agence France-Presse. Related Links TRW Northrop Grumman SpaceDaily Search SpaceDaily Subscribe To SpaceDaily Express DOJ Wants More Data On Northrop Grumman's Plan To Buy TRW Los Angeles - Apr 11, 2002 Northrop Grumman Corporation announced that it intends to comply promptly with a request received late yesterday from the U.S. Department of Justice for additional information under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 regarding its proposed acquisition of TRW Inc.
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