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Industry Icon Key Matchmaker in Merger of Northrop, TRW

July 30, 2002|PETER PAE | TIMES STAFF WRITER

The $7.8-billion merger between Northrop Grumman Corp. and TRW Inc. had all the players typical in a big corporate deal: Wall Street bankers, lawyers and top corporate executives.

But a key role in orchestrating the deal was played by someone unrecognized as being a power broker, a man--many years older than Pope John Paul II--who until recently was known for his violin playing and as an architect of the nation's first intercontinental ballistic missiles.

Simon Ramo, 89, who co-founded TRW in the 1950s, is credited with helping bring together Northrop Grumman and TRW, making him one of the oldest matchmakers in corporate America.

After more than four months of wrangling, Northrop and TRW struck a friendly deal earlier this month to create the nation's second-largest military contractor. It culminated Northrop's remarkable transformation from a struggling bit player to a defense industry powerhouse.

Ramo retired from TRW nearly a quarter century ago. But executives and directors for both Northrop and TRW, most of whom spoke on condition they not be identified, said Ramo was instrumental in working behind the scenes to bring the haggling companies together, often acting as the "sounding board" and ultimately a key source of intelligence for both sides.

Northrop Chairman Kent Kresa was coy about Ramo's exact role, but acknowledged that Ramo "certainly understood the importance of the marriage" and "he talks to a lot of people and he's involved in everything."

Ramo declined to comment about the scope of his involvement, saying only that "acquisitions and mergers are always under discussion."

"I know a lot of people in the industry. Many of them worked for me, so when they call and ask for advice, I give it to them," Ramo said.

Ramo was far more engaged with the deal than he will publicly acknowledge. In fact, it was Ramo's urging that prompted Northrop and TRW to begin talking about a possible merger as far back as six years ago, sources familiar with the process said. He arranged the first of many meetings between TRW and Northrop.

Moreover, in more recent discussions, Ramo wasn't shy about giving advice to TRW directors looking for guidance on how they should respond to Northrop's offer, predicting at the onset in late February that Northrop might have to raise its bid to $60 a share to get the deal done. After initially offering $47 a share, Northrop raised the bid three more times, to $53, then $58 and finally to $60.

Former TRW executives say Ramo began to believe more than a decade ago that TRW was becoming a marginal player in the defense industry as consolidation created a handful of powerful behemoths and as TRW became distracted with diversifying into automotive parts and other commercial endeavors.

"He had the idea of breaking TRW into pieces and merging the defense business with Northrop," a former executive said. "He didn't lose sight of it even after all this time."

The idea became particularly attractive to Ramo in the last year, according to sources, partly because of Ronald Sugar, who worked at TRW for 20 years and eventually headed the company's space and defense electronics business in Redondo Beach before bolting to Litton Industries Inc. after he had been passed over for TRW's top job. When Northrop acquired Litton last year, Sugar became Northrop's president, making him the likely successor to Kresa.

Ramo has told close friends that he considers Sugar his top "prodigy," a remarkable statement considering that some of the more notable names in aerospace have worked for Ramo at one time or another, including three heads of NASA.

Ramo's associates and former employers say it's not surprising that Ramo would have been so engaged in the merger despite his age. "He kept an active interest in what we were doing and he still does," said Edsel D. Dunford, who was TRW's president in the early 1990s. "He still visits TRW operations to look at specific projects. He's mind is very sharp."

Ramo has also kept up physically, although he gave up tennis two years ago after his longtime partner couldn't play anymore. He also stopped playing the violin, a casualty of arthritis that hindered the kind of finger dexterity that once allowed Ramo to play quartets with professionals and a duet with Jascha Heifetz.

But age hasn't stopped Ramo from going to his West Hollywood office from his Beverly Hills home daily, working the telephones and meeting key industry officials for lunch at the Four Seasons Hotel.

Top TRW executives fly into Los Angeles four times a year to meet with Ramo, who shares his thoughts about the industry and the company, often espousing what some younger executives would consider grandiose ideas. Making the list of those going to the meetings is considered a hallmark of success at TRW.

"When I was first introduced, I was prepared to provide a lot of input but I found out quickly he prefers to provide the input," Dunford said.

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