Jun 20, 2002 By Paul Nowell Ap Business Writer 3 min read

CHARLOTTE, N.C. (AP) – Global aerospace parts maker Goodrich Corp. has agreed to buy TRW Inc.’s aeronautical systems businesses for $1.5 billion in cash, as TRW restructures rather than accept unsolicited takeover bid from defense contractor Northrop Grumman. The deal, announced late Tuesday, “will expand Goodrich’s product line and open new growth opportunities,” Goodrich chairman and chief executive officer David L. Burner told analysts on a teleconference call Wednesday.

It was not immediately clear how the Goodrich deal might affect a hostile takeover bid by Los Angeles-based Northrop Grumman Corp. Northrop agreed last month to delay its pursuit of its $6.7 billion bid for TRW while it examines the company’s private records under terms of a confidentiality agreement. A message seeking comment from Northrop was not immediately returned Wednesday.

TRW has proposed its own breakup plan that would include separating its auto parts business and that TRW said would be worth more than Northrop’s offer.

“This is the first milestone in our process of enhancing value for shareholders,” said TRW spokesman Jay McCaffrey said. “It was a very attractive offer for us in price and terms.”

The $1.5 billion from the sale of the aeronautical division will be used to reduce TRW’s $5.5 billion in debt, he said.

TRW is in discussions with other companies to sell its space and electronics division and information technology division. The company, with sales of more than $16 billion, also plans to spin off its automotive division into independent company called TRW Automotive Inc.

“This needed to be done prior to us taking any action such as spinning off our automotive division into a standalone entity,” McCaffrey said.

TRW Aeronautical Systems had 2001 revenue of $1.1 billion and earnings before taxes and special items of $180 million. Goodrich’s aerospace sales were $4.2 billion in 2001.

About 55 percent of TRW Aeronautical Systems’ sales are original equipment and the rest from parts. Military sales account for 25 percent of the total, complementing Goodrich’s growth in that sector.

“The integration of Aeronautical Systems with Goodrich will significantly strengthen our position as a top-tier aerospace systems supplier and further deepen our longstanding relationships with shared customers worldwide,” Burner said.

McCaffrey would not discuss whether there were other bids for the aeronautical division, the smallest of the company’s four divisions. It is based in Solihull, U.K., and has manufacturing facilities and other operations in nine countries, employing about 6,200 people. The agreement was approved by the boards of directors of both companies and is subject to approval by U.S. and European regulators.

Burner said Goodrich does not anticipate any regulatory problems to hold up the deal and anticipates closing the transaction by the end of the fourth quarter. Goodrich expects to finance the deal through a combination of debt and equity-linked securities.

Goodrich is completing its makeover from an Akron, Ohio-based tire maker named BFGoodrich. The company no longer makes tires. Charlotte-based Goodrich instead makes landing gear, engine components and electrical systems for commercial, business and military aircraft. It employs 18,000 people worldwide in 20 countries.

Shares of TRW rose 37 cents to $56.07 in midday trading Wednesday on the New York Stock Exchange. Goodrich shares fell 19 cents to $29.12 and Northrop shares gained $2.60 to $132.30.

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On the Net:

TRW Inc.: http://www.trw.com

Goodrich Corp.: http://www.goodrich.com