Saturday, May 04, 2002

TRW voters block bid

Northrop tries hostile takeover

The Associated Press

        LYNDHURST, Ohio — TRW Inc. said Friday that its shareholders voted to block Northrop Grumman Corp.'s $6.7 billion hostile takeover attempt, rejecting the defense contractor's bid to acquire more than 20 percent of TRW's shares.

        Northrop officials said they would let their offer to buy TRW for $53 a share lapse Friday night and announce Monday whether they still want to buy the company.

        Under Ohio's tough anti-takeover laws, Northrop cannot buy more than 20 percent of TRW's stock without permission of stockholders. At a special meeting Friday, shareholders voted not to grant permission to Northrop.

        A vote total was not immediately available, but TRW Chairman Philip Odeen said, “I would characterize it as a clear-cut victory.”

        Under laws adopted in 1982 and 1990, outside parties are limited in buying shares that would allow them to oust a target company's board of directors. Northrop has challenged the laws in a lawsuit pending in federal court.

        Northrop has been trying to go directly to TRW shareholders since the suburban Cleveland company's board twice rejected its bids as inadequate. Both companies spent weeks furiously soliciting support from shareholders and engaging in public relations campaigns.

        The vote means that if Northrop Grumman still wants to take over TRW, it will have do so through ne gotiations with the TRW board.

        Mr. Odeen told shareholders on Friday that both sides met Thursday night and had constructive talks, but Northrop vice president Al Myers told shareholders no progress has been made.

        Mr. Myers told shareholders before the vote that approval of the measure was critical to keep Northrop Grumman's takeover attempt alive.

        The Los Angeles-based defense contractor has been attempting to go directly to shareholders after the suburban Cleveland company's board twice rejected Northrop Grumman bids as inadequate.

        TRW is a large, diverse company involved in aerospace, defense, automotive parts and information technology. Northrop Grumman's most recent offer amounts to $53 of Northrop Grumman stock per TRW share.

        Northrop Grumman would sell off TRW's auto parts business. TRW has proposed its own breakup plan that the TRW board has said would be worth more than Northrop Grumman's current offer.

        Northrop Grumman has said it could revise its offer, but only if it obtains complete access to TRW's financial records.

        TRW has said it has offered to open its books to Northrop Grumman, but Northrop officials say TRW has set unacceptable limits that would prevent Northrop Grumman from making additional bids directly to the shareholders.


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