Northrop Grumman Corp, seeking to become the biggest defense contactor, made an unsolicited offer of about US$10.8 billion in stock and assumed debt for TRW Inc, three days after TRW's chief executive officer quit.
Northrop proposed paying US$47 a share in stock, or 18 percent more than TRW's closing price yesterday. Shares of TRW, which is reviewing the offer and said the bid's timing was "regrettable," climbed 26 percent.
"Being involved more strongly in missile defense is an important part" of why the offer was made, Northrop Chief Executive Kent Kresa said in an interview. Cleveland-based TRW is one of the main subcontractors on a US program to build a so-called missile defense shield.
TRW's automotive parts unit, which accounts for about three-quarter of sales, will be separated from the company if a transaction is completed. TRW's stock dropped as much as 14 percent this week after CEO David Cote resigned.
"Cote was the real reason we owned the stock," said Daniel Bandi, who manages about US$1.3 billion for Armada Funds at National City Investment Management Co. "After he left, we started selling the shares. We thought someone might come in and buy it, we just didn't think it would happen so quickly."
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