TRW Credit Unit to Be Sold to Private Group

TRW Inc.’s credit reporting and real estate information division in Orange County, which collects and distributes financial data on millions of Americans, will be sold for $1.1 billion to a private investment group, the Cleveland-based conglomerate said Friday.

The deal apparently followed a campaign by frustrated executives to win their freedom from TRW, which they felt was ignoring the information division’s potential.

The current management is expected to remain, and general manager D. Van Skilling said he will become chief executive of the new privately held company when the sale is completed.

TRW Information Systems & Services’ market share has shrunk to about 30% from 33% in 1990, according to industry analysts. It remains one of the nation’s largest consumer-credit rating agencies, however.

“I’ve been telling them for several years to play me or trade me,” Skilling said. The company headquarters will remain in Orange and the sale, to be completed in the summer, is not expected to affect employment, he added.

Employees in Orange, who were told of the deal at a staff meeting at the nearby Doubletree Hotel shortly before noon Friday, said they were happy that the company was not being acquired by a competitor that would likely have slashed the payroll and consolidated TRW’s operations.

“There was some out-and-out joy and some apprehension,” Ken Krueger, a 10-year company veteran, said after the sale was announced to employees. “Joy because we know that this group wants to buy us and apprehension because there’s still uncertainty about what each person’s job future holds.”

TRW Information’s 3,600 employees will be retained and the basic business operation will not be changed, Skilling said. The company has even licensed use of its old name for up to two years and will operate as TRW Information while professional corporate identity designers wrestle to come up with a new one.

Consumers’ credit reports won’t be affected by the sale, said Mark Nunnelly, managing director of Bain Capital Inc., one of two Boston-based investment firms financing the deal.

TRW Information maintains and issues credit reports on more than 190 million people and 13 million businesses. Subsidiaries provide directing marketing information to retailers and collect and interpret real estate market data for clients in the real estate and property development industries.

Joseph T. Gorman, TRW’s chairman and chief executive, said his company will receive $1.01 billion cash and $90-million worth of stock for the information services unit, which last year posted sales of about $540 million--or just over 5% of TRW’s total revenue.

TRW, which will have a 16% stake in the new company, also will keep a seat on its board of directors.

Gorman said TRW plans to use cash from the sale to buy back company stock and finance investment opportunities in the company’s automotive and space and defense businesses.

Although many analysts greeted the news favorably, many investors have been worried that selling the information unit would cut into TRW’s profitability. TRW stock dropped $1.25 a share to $85.125 on the New York Stock Exchange before trading was suspended Friday afternoon in anticipation of the company’s announcement.

Bain Capital, which specializes in mergers and acquisitions in the information services industry, teamed with Thomas H. Lee Co. to head the consortium that is buying TRW Information.

TRW Information has 1,000 people at its headquarters in Orange and 320 at the TRW-Redi Property Data Services subsidiary in Anaheim.

News of the sale of the information group confirmed reports published earlier this week.

The TRW Information operations have been called an orphan subsidiary by some analysts because their business does not mesh with parent TRW’s core pursuits in the automotive and aerospace industries.

“It makes sense to sell it, because it doesn’t fit,” said Cai Von Rumohr, an analyst with investment banker Cowen & Co. in Boston.

But it also is a very profitable business, generating nearly $90 million in operating profit last year.