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TRW Says Goodrich to Buy Aircraft Unit

Deals: The $1.5-billion sale could be an effort to fend off Northrop's takeover bid.

June 19, 2002|PETER PAE | TIMES STAFF WRITER

TRW Inc., an acquisition target of Northrop Grumman Corp., said late Tuesday that it had reached a tentative agreement to sell its aircraft-parts business to Goodrich Corp. for $1.5 billion.

The anticipated sale is part of a breakup plan TRW devised shortly after Century City-based Northrop proposed acquiring the company with a price tag that has been sweetened to $6.7 billion.

Northrop, in its acquisition proposal, has said it would sell TRW's aircraft parts as well as the automobile parts businesses while keeping the company's core and more lucrative defense electronics and military satellite operations.

It wasn't clear immediately if the sale would strengthen TRW's efforts to fend off Northrop's bid. TRW said late Tuesday that it would use the proceeds to pay down its high debt level, which has hurt its bottom line.

Northrop has maintained that buying TRW without both the aircraft and auto parts businesses, which have been a drain on TRW's earnings, would enhance its ability to acquire TRW.

Northrop is conducting due diligence of TRW's financial documents in hopes of coming up with a friendly deal.

For Goodrich, the acquisition would strengthen its position in the commercial and military aerospace business.

Goodrich has significant presence in Southern California. It employs about 2,000 people in Chula Vista, where it makes aircraft engine parts, and has about 700 employees in Riverside, where it makes wing and flight controls.

Goodrich said it planned to finance the acquisition, which was seen closing in the fourth quarter, with a combination of debt and equity-linked securities.

TRW said it would report the aircraft-parts business, Aeronautical Systems, as a discontinued operation and anticipated second-quarter earnings per share from continuing operations of 98 cents to $1, excluding unusual items.

"We are very pleased with the successful sale of our Aeronautical Systems business," TRW Chairman Philip A. Odeen said in a statement.

The unit, which has about 6,200 employees, had sales of $1.1 billion in 2001. It is based in Solihull, England, and has manufacturing facilities and other operations in nine countries. TRW had sales of $16 billion last year.

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