TRW Board Calls Latest Offer Inadequate

TRW Inc. announced today that the latest offer of $53 U.S. from Northrup Grumman does not pass muster.
After careful consideration including consultation with independent financial and legal advisors, TRW’s board of directors has unanimously (with one director absent) determined that Northrop Grumman Corporation’s April 15, 2002 exchange offer for all outstanding shares of TRW common stock for $53 per share was financially inadequate and not in the best interests of TRW’s shareholders.
Accordingly, the board of directors strongly recommended that shareholders reject Northrop’s offer and not tender their shares for exchange.
Philip A. Odeen, TRW’s chairman, said, “We view this revised offer as recognition on Northrop’s part that their earlier offer was grossly inadequate. As our excellent first quarter earnings announced today attest, TRW’s financial performance is strong and, as a result of favorable trends in both our automotive and defense businesses, we have increased our earnings expectations for the full year 2002.
“At $53 per share, our Board continues to believe that Northrop’s offer is inadequate. Furthermore, Northrop’s newly imposed condition that their offer is subject to satisfactory completion of due diligence undermines the legitimacy of Northrop’s purported price increase and contradicts their stated rationale for the higher price,” continued Mr. Odeen.
The board cited several points in its decision.
– Northrop’s revised offer continues to undervalue TRW’s businesses and its opportunities.
— The Board believes that the Company’s strategic plan to accelerate its debt reduction and separate its automotive and defense businesses is well-positioned to deliver more value than Northrop’s revised offer. — Goldman, Sachs & Co. and Credit Suisse First Boston Corporation, the Company’s independent financial advisors, have both expressed the opinion that Northrop’s offer is inadequate to the Company’s common shareholders from a financial point of view.
— The revised offer does not adequately compensate TRW shareholders for transferring control of the Company to Northrop, or for the value of the synergies that the Board believes Northrop would be likely to realize if a transaction were consummated.
— Northrop’s revised offer continues to be highly conditional. Unlike its previous proposal, it is further conditioned upon Northrop’s completion of a due diligence investigation to its satisfaction.
In addition to continuing the aggressive execution of its value enhancement plan, TRW’s Board has authorized management and its advisors to initiate a process to explore all strategic alternatives to create shareholder value in excess of Northrop’s offer. As part of this process, TRW would anticipate sharing non-public information with interested parties, subject to their entering into appropriate confidentiality agreements. Should Northrop so desire, it may engage in this process on the same basis as other parties. TRW noted that there can be no assurance that this exploration process would lead to any agreements or transactions. Mr. Odeen concluded, “As we’ve said all along, this is all about shareholder value and this Board will continue to do what is in the best interests of TRW shareholders.” TRW continues to urge shareholders to vote against Northrop’s proposals at the upcoming shareholder meetings.