Two Investors Acquire Large Stakes in Northrop

Two investment firms, Sanford C. Bernstein and Delaware Management Co., have acquired large stakes in Northrop, the company disclosed in its annual proxy statement Tuesday.

Bernstein acquired 8.1% of Northrop’s 47 million common shares and Delaware Management 6.27%. Northrop spokesman Tony Cantafio said late Tuesday that the stock acquisitions have not been previously reported.

“As far as we know, it is for investment purposes,” Cantafio said.

The proxy disclosure left unclear whether Bernstein and Delaware Management were holding all or some of the shares in trust. The proxy noted that Berstein has sole voting power over only 1.9 million shares of its 3.8 million shares and Delaware Management over only 1.3 million shares of its 2.9 million shares.

Analysts said they doubted that Northrop could be taken over by an unfriendly investor, because large blocks of stock are held by insiders. But the company has been considered vulnerable because of its severely depressed stock.

Northrop shares closed trading Tuesday at $15, which put the value of the 47 million outstanding shares at just $705 million, or somewhat more than the cost of a single Northrop B-2 Stealth bomber. It has dropped almost continuously since the mid-1980s when it peaked at over $50.

Northrop also announced Tuesday that it appointed an independent investment manager to purchase its own common shares on behalf of its retirement plan. Under federal law, the plan can acquire up to 25% of Northrop shares, as long as the investment does not exceed 10% of the assets of the retirement plan, which it would not at current stock prices.

In addition, the proxy noted that the company’s savings plan holds 16.4% of the firm’s common shares. If the pension were to acquire the maximum 25% of outstanding stock, then employees would hold 41% of the stock, not including those shares held by officers and directors. Northrop Chairman Thomas V. Jones holds 4.9% of the company stock.

Wolfgang Demisch, an analyst at UBS Securities, said the arrangements “would make it very hard for any outsider to mount an unfriendly takeover.” Demisch noted that at $15 per share, he regards the stock as a “good value.”