TRW shareholders get their first chance to speak out on Northrop Grumman's hostile takeover bid at the company's annual meeting on 24 April. They will vote on a resolution to open the company's books to Northrop Grumman, but TRW has succeeded in delaying a crucial vote that would allow the share exchange offer to proceed.

Late last week an Ohio court allowed TRW to delay from 22 April to 3 May a special meeting at which shareholders are to vote on whether to allow Northrop Grumman to continue accumulating TRW shares beyond the 20% limit imposed by the state's anti-takeover laws. The court had earlier denied Northrop Grumman immediate relief from those laws.

Northrop Grumman has improved its offer from $47 to $53 a share, raising the value to $6.7 billion, in a bid to increase pressure on TRW to negotiate. Without shareholder approval, the company's exchange offer is effectively stalled. TRW rejected the revised offer as "inadequate", and is continuing with plans to spin off its automotive business and sell its aeronautical systems unit. But the board has directed management to explore "all strategic alternatives", including other buyers prepared to pay more.

TRW says it is prepared to open its books to interested parties - including Northrop Grumman - a move analysts believe could lead to an auction. Northrop Grumman has expressed concern that TRW will demand a halt to its exchange offer before granting access to detailed financial information, without which the offer cannot proceed.

Improved first-quarter results helped TRW, with operating earnings up 24%. Sales were down 2%, but profits were up 2% in defence, flat in automotive and down over 40% in aeronautical systems. Debt was stable at $5.5 billion. Reducing debt is vital to TRW's bid to remain independent. Northrop Grumman more than doubled its first-quarter sales after last year's acquisitions. Operating earnings were up 65%, but debt rose by 8% to $5.4 billion.

Source: Flight International