Grumman Board Agrees to Northrop Buyout Talks
In a move that appears to open the door to Northrop Corp.’s takeover offer, the directors of Grumman Corp. Thursday authorized the company to begin discussions with Northrop to “clarify” its $2-billion bid.
Although Grumman specifically said it was seeking to negotiate a merger, the announcement marks a clear departure from the firm’s initial position of not wanting to entertain any bid from Northrop.
After Martin Marietta announced a negotiated agreement to buy Grumman for $55 per share earlier this month, Northrop made an unsolicited offer of $60 per share and signaled that it was willing to go higher.
“We are pleased with their decision and look forward to further discussion,” Tony Cantafio, a Northrop spokesman, said Thursday.
Martin Marietta officials already are irked that Grumman provided additional financial information to Northrop earlier this week. A team of executives, including Northrop Chairman Kent Kresa, visited Grumman headquarters in Bethpage, N.Y.
After that visit, Martin Marietta Chairman Norman Augustine complained in a letter Wednesday that the visit by Northrop executives and Grumman’s sharing of information was a violation of a confidentiality agreement with Martin.
Revealing obvious uncertainty and concern, Augustine wrote to Grumman Chairman Renso Caporali that “I certainly hope that Grumman remains committed to the merger agreement which we entered into in good faith.”
Caporali, however, questioned whether Grumman could ignore a higher bid. Caporali asked in a letter to Augustine how his company could prove in court that a higher bid by Northrop would result in irreparable injury to Grumman.
Grumman’s announcement Thursday came in another letter sent to Northrop, which was filed with the Securities & Exchange Commission. That letter was in response to a Northrop request on Wednesday that Grumman not erect any additional acquisition barriers to Northrop.
Martin has a so-called lockup agreement in which Grumman pay Martin $50 million if it accepted a higher rival bid. Northrop has contended that that agreement is illegal.
