Northrop gets a boost from TRW deal

By Gary Gentile
Associated Press

TRW technicians work on a chemical laser. Northrop Grumman Corp. is buying TRW Inc., a move that makes Northrop the nation's second-largest defense contractor. Associated Press

The deal to buy TRW for $7.8 billion in stock completes Northrop Grumman's transformation from an aircraft maker in the early 1990s to a weakened company in 1998 after a derailed merger with Lockheed Martin Corp. to becoming the nation's second-largest defense contractor.

The company, which will maintain its Los Angeles headquarters, now makes Global Hawk unmanned surveillance planes, which were used in Afghanistan, as well as the kind of database management systems vital to linking information housed on the computers of various intelligence agencies.

And TRW's space business gives Northrop the missing link in its high-tech warfare arsenal — sophisticated spy satellites used in the hunt for terrorists.

"It's right in the sweet spot for the future," Northrop Grumman chief executive Kent Kresa said yesterday. "We're going to be a very important force and a competitive force in that marketplace."

Northrop's offer of $7.8 billion in stock is nearly $2 billion more than it offered five months ago. Nor-throp will also assume about $4 billion in TRW debt.

The deal gives Northrop projected annual revenue of more than $26 billion.