TRW Says It Will Open Books to Second Suitor

TRW Inc. said Monday it had signed a confidentiality agreement to open its books to a potential buyer other than hostile bidder Northrop Grumman Corp.

The defense contractor and auto parts maker did not reveal the identity of the potential buyer.

TRW made the announcement while responding to a statement from Northrop that criticized it for placing restrictions on a similar confidentiality agreement with Northrop.

Northrop is pursuing a $6.7-billion bid for Cleveland-based TRW.

Northrop said it would not sign the confidentiality agreement because it contained “onerous restrictions.”

The Century City-based firm said the proposed agreement, which would give it access to TRW’s books, includes a so-called standstill clause and other conditions having nothing to do with confidentiality.

Standstill agreements typically prevent an interested buyer from pursuing a hostile bid should the target choose another suitor.

They also impose certain limitations that ensure the company stock will not find its way to a hostile bidder, Northrop in this case.

Northrop’s rejection of the agreement comes just two days before TRW’s annual meeting, where shareholders will vote on whether to give the suitor access to the company’s books.

“We are deeply disappointed that Northrop Grumman has chosen to negotiate the terms of our confidentiality agreement in the press,” wrote William Lawrence, general counsel for TRW, responding to Northrop’s statement.

Before the announcement, TRW closed down 9 cents at $53.51, and Northrop closed up $1.92 at $114.16. Both are traded on the New York Stock Exchange.

TRW said it was not eager to get into an exclusive agreement with Northrop just yet, saying last week it was willing to share its books with other parties, thereby almost inviting a bidding war for the company.