Press Release

Northrop Grumman Proposes to Acquire TRW

By SpaceRef Editor
February 22, 2002
Filed under , ,

Northrop Grumman
Corporation today announced that it has forwarded a proposal (see
attached) to TRW’s board of directors to enter into negotiations
to combine the two companies.
The proposed transaction would deliver $47 in
value of Northrop Grumman common stock for each share of TRW.

“We believe the strategic combination of Northrop Grumman and TRW will
provide tremendous value to the shareholders of both companies,” said Kent
Kresa, Northrop Grumman’s chairman and chief executive officer.
Grumman’s electronics and systems integration capabilities, combined with
TRW’s space and systems expertise, would create a strong contributor to the
nation’s satellite and missile defense requirements.

“This combination would further our long-term strategic goals by
strengthening our space business, adding communications technology and
capabilities, and enhancing our information technology business,” Kresa added.
“We expect that, once we reach a timely agreement with the TRW board of
directors, we will be able to close this transaction in the 2002 third

Ronald D. Sugar, Northrop Grumman’s president and chief operating officer,
stated “this transaction would strengthen our portfolio, and would bring
together the advanced technologies and extraordinary human talent of both
With the integration of our 2001 acquisitions largely behind us,
we are confident that our management, in conjunction with the leadership of
TRW, can quickly and successfully integrate the defense and aerospace
businesses of Northrop Grumman and TRW.”

Promptly following the close of the transaction, Northrop Grumman would
expect to separate TRW’s automotive business.
Excluding TRW’s automotive
business, Northrop Grumman projects combined 2003 sales of approximately
$26 billion to $27 billion.
The impact of this transaction is expected to be
neutral to Northrop Grumman shareholders when considering the earnings
delivered by both the retained and automotive businesses.

Including the effects of this transaction, Northrop Grumman would expect
to have a debt to total capitalization ratio below 40 percent at 2002

TRW provides advanced-technology products and services for the aerospace,
information systems and automotive markets worldwide.
The company generated
year-end 2001 sales of $16.4 billion.

Northrop Grumman Corporation is an $18 billion, global defense company
with its worldwide headquarters in Los Angeles.
Northrop Grumman provides
technologically advanced, innovative products, services and solutions in
defense and commercial electronics, systems integration, information
technology and nuclear and non-nuclear shipbuilding and systems.
With nearly
100,000 employees and operations in 44 states and 25 countries, Northrop
Grumman serves U.S. and international military, government and commercial

Certain statements and assumptions in this release contain or are
based on “forward-looking” information (that the company believes to be within
the definition in the Private Securities Litigation Reform Act of 1995) and
involve risks and uncertainties.
Such “forward-looking” information includes
the statements above as to the impact of the proposed acquisition on revenues
and earnings.
Such statements are subject to numerous assumptions and
uncertainties, many of which are outside the company’s control.
These include
negotiation and completion of a formal transaction agreement, governmental
regulatory processes, the company’s ability to successfully integrate the
operations of TRW, achieve a successful transaction or other resolution with
respect to the TRW automotive sector, assumptions with respect to future
revenues, expected program performance and cash flows, the outcome of
contingencies including litigation, environmental remediation, divestitures of
businesses, and anticipated costs of capital investments.
The company’s
operations are subject to various additional risks and uncertainties resulting
from its position as a supplier, either directly or as subcontractor or team
member, to the U.S. Government and its agencies as well as to foreign
governments and agencies; actual outcomes are dependent upon factors,
including, without limitation, the company’s successful performance of
internal plans; government customers’ budgetary restraints; customer changes
in short-range and long-range plans; domestic and international competition in
both the defense and commercial areas; product performance; continued
development and acceptance of new products; performance issues with key
suppliers and subcontractors; government import and export policies;
acquisition or termination of government contracts; the outcome of political
and legal processes; legal, financial, and governmental risks related to
international transactions and global needs for military aircraft, military
and civilian electronic systems and support and information technology; as
well as other economic, political and technological risks and uncertainties
and other risk factors set out in the company’s filings frÒXime to time with
the Securities and Exchange Commission, including, without limitation, the
company’s reports on Form 10-K and Form 10-Q.

This announcement is neither an offer to purchase nor a solicitation of an
offer to sell shares of TRW or Northrop Grumman.
Should any such offer be
commenced, Northrop Grumman will file and deliver all forms, notices and
documents required under state and federal law.

The following letter to Mr. Philip A. Odeen and Mr. Kenneth W. Freeman is
issued by Kent Kresa, Chairman and CEO of Northrop Grumman Corporation:

February 21, 2002

Philip A. Odeen

Office of the Chief Executive

Kenneth W. Freeman

Lead Director

TRW Inc.

1900 Richmond Road

Cleveland, OH 44124


As you know from prior conversations between our companies, for quite some
time we have believed that a merger of the TRW Inc. (“TRW”) aerospace and
information systems businesses with the complementary operations of Northrop
Grumman Corporation (“Northrop”) would be a compelling strategic combination
in the best interests of stockholders, customers and employees of both
I am writing at this time to formally propose a transaction for
this purpose.

Based upon publicly available information, Northrop is prepared to provide
all TRW stockholders with $47.00 in Northrop common stock for each share of
TRW common stock.
The transaction will be structured so that the receipt of
Northrop stock by TRW stockholders will be tax-free.
The proposed $47.00 per
share of TRW common stock represents a premium of 18% over today’s closing
price, a premium of 22% over the average trading price for the last twelve
months and is 4% over the highest closing price for the last twelve months.
We would welcome the opportunity to consider non-public information concerning
TRW, and we are prepared to consider in our offer any enhanced values that may
be demonstrated by such information.
Naturally, we are prepared to provide
TRW and its representatives with a similar “due diligence” opportunity
concerning Northrop non-public information.

Upon completion of the acquisition transaction, it is Northrop’s intention
to proceed with the separation of the TRW automotive business from the rest of
the company immediately.
We recognize that the automotive business is an
outstanding operation in its own right, but we believe that it does not
logically fit with either your or our other business segments.

Northrop has successfully completed the integration of many large
acquisitions in recent years, and I believe we have earned the reputation for
recognizing the continuing value and contribution of the executives of those
acquired companies.
We have also demonstrated fairness and evenhandedness in
dealing with employees of the acquired companies and for scrupulously
observing employees’ rights to compensation and benefits.

Northrop is prepared to begin immediately with the due diligence process
and negotiation of a definitive acquisition agreement for the approval of our
respective Boards of Directors.
With full cooperation from both sides, we can
conclude our agreement no later than March 11, 2002 and commence immediately
the necessary proceedings for stockholder approval in accordance with Ohio law
and for approval of our own stockholders.
Our antitrust counsel has advised
us that delays in connection with the antitrust review process should be
minimal; and we believe a transaction could realistically be completed in the
third quarter of this year.

Ron and I sincerely believe that a combination of TRW’s aerospace and
information systems businesses with our own will maximize the opportunities to
enhance the value of those operations for the benefit of all our stockholders.
Not only are the operations highly complementary, but the TRW operations will
enjoy the support of a stronger balance sheet.

In light of the importance of this proposal to Northrop’s shareholders, we
will be publicly disclosing this letter.
Should you have any questions
concerning our offer, I and our representatives are prepared to speak with you
at any time.
We would appreciate your response to this offer by the close of
business February 27, 2002.


Kent Kresa

SpaceRef staff editor.