TRW rejects Northrop Grumman's revised offer, invites other bidders

TRW Inc.'s board of directors has rejected Northrop Grumman Corp.'s new offer to buy the company for $53 per share. The board called the new offer inadequate and is recommending that shareholders reject it, the company announced April 17.

Los Angeles-based Northrop Grumman first offered $47 per share in February. TRW's shareholders are scheduled to vote on Northrop Grumman's bid April 22.

While pushing for a rejection of Northrop Grumman's bid, Cleveland-based TRW opened the door for other potential bidders, announcing the board has "authorized management and its advisers to initiate a process to explore all strategic alternatives."

The company said it would be willing to share nonpublic information with interested parties, subject to appropriate confidentiality agreements. "Should Northrop so desire, it may engage in this process on the same basis as other parties," the company said. Doing any such exploration doesn't guarantee agreements or transactions, the company said.

Northrop Grumman released a statement expressing "cautious optimism" over TRW's decision to allow sharing of nonpublic information. Northrop Grumman Chairman and CEO Kent Kresa said the company has been asking to conduct normal due diligence since February.

TRW's sees Northrop Grumman's latest offer as recognition that its first offer was "grossly inadequate. As our excellent first quarter earnings announced today attest, TRW's financial performance is strong and, as a result of favorable trends in both our automotive and defense businesses, we have increased our earnings expectations for the full year 2002," said Philip Odeen, TRW chairman, in a prepared statement.

TRW operating earnings for the first quarter of 2002 increased 24 percent to $92 million, compared to $74 million in 2001.

TRW's board cited several reasons to reject Northrop Grumman's latest offer, including:

*The revised offer still undervalues TRW's businesses and opportunities;

*TRW's strategic plan to accelerate its debt reduction and separate its automotive and defense businesses is well-positioned to deliver more value than Northrop Grumman's revised offer;

*Goldman, Sachs & Co. and Credit Suisse First Boston Corp., the company's independent financial advisers, have expressed the offer is inadequate to TRW's common shareholders from a financial point of view;

*Northrop Grumman's revised offer continues to be highly conditional. Unlike its previous proposal, it is further conditioned upon Northrop Grumman's completion of a due diligence investigation to its satisfaction.

In developments on Northrop Grumman's side of the acquisition battle, the U.S. District Court in the Northern District of Ohio April 15 denied TRW immediate relief with respect to Ohio's anti-takeover laws, but reserved ruling on the merits of the issues raised by Northrop Grumman until after TRW holds its special shareholders meeting April 22.