Northrop Grumman to Ask TRW Board to Reconsider Bid

Northrop Grumman Corp. detailed two proposals Monday that it plans to take to TRW Inc.’s shareholder meeting in April, urging TRW’s board to reconsider its $5.9-billion takeover offer.

The resolutions call for TRW to set up a committee of independent directors to consider Northrop’s $47-a-share unsolicited bid and to give Northrop access to key financial information.

Northrop said in its filing with the Securities and Exchange Commission that it’s willing to engage in discussions with TRW, “including evaluating a potential increase in the proposed consideration if TRW provides nonpublic information which warrants such an increase.”

TRW rejected Northrop’s offer last week and announced its own plans to boost shareholder value, including spinning off its automotive parts unit within nine months.

Analysts said TRW’s proposal makes the company more valuable and that Northrop Grumman will have to raise its offer.

Most analysts expect TRW’s breakup proposal to deliver a value of $50 to $55 a share for shareholders.

Northrop Grumman’s bid values TRW at $47 a share.

Northrop, which owns a handful of TRW shares, plans to present its proposals at TRW’s annual general meeting on April 24.

Separately Monday, British aerospace and defense company Smiths Group was reported to be seriously considering a bid for TRW’s aeronautics business.

“A business like this does not come up for sale very often,” a person familiar with the talks told Reuters.

Much of TRW’s aeronautics business is the former Lucas Aerospace operation in the West Midlands region of Britain, making a bid from Smiths logical.

If Smiths puts in a bid and succeeds, it would further strengthen its ties with European aircraft maker Airbus as a customer. Smiths already has strong ties with Boeing Co .

TRW has not stamped a price tag on the business but analysts and bankers say the Ohio-based group could get $1.3 billion to $1.5 billion.

United Technologies Corp. and Honeywell International Inc. also have been described as potential buyers.

A sale of TRW’s aeronautics business combined with progress in spinning off its auto parts business could influence TRW shareholders from refraining from voting in favor of the Northrop bid.

On the New York Stock Exchange, Cleveland-based TRW rose 53 cents to $51.37. Los Angeles-based Northrop fell 40 cents to $108.75.