TRW shareholders use tough Ohio laws to block Northrop Grumman hostile takeover bid
Friday, May 3rd 2002, 12:00 am
News On 6
LYNDHURST, Ohio (AP) _ TRW Inc. shareholders on Friday blocked a $6.7 billion hostile takeover bid by defense contractor Northrop Grumman, taking advantage of Ohio's tough anti-takeover laws.
Northrop Grumman officials said they would announce Monday whether they still planned to try to buy the company.
``I would characterize it as a clear cut victory,'' said Philip Odeen, chairman of TRW, which is involved in aerospace, defense, automotive parts and information technology. No official vote total was immediately available Friday.
Under Ohio's 1982 Control Share Acquisition Act and the 1990 Business Combination Statute, outside parties are limited in their ability to buy up shares that would allow them to oust a target company's board of directors. Northrop Grumman, which was seeking to acquire more than 20 percent of TRW shares, has a lawsuit over the rules pending in federal court.
Northrop Grumman had been trying to go directly to TRW shareholders since the suburban Cleveland company's board twice rejected its bids as inadequate. Both companies spent weeks furiously soliciting support from shareholders and engaging in public relations campaigns.
Friday's vote means that if Northrop Grumman still wants to take over TRW, it will have do so through negotiations with the TRW board.
Odeen told shareholders that both sides met Thursday night and had constructive talks. Northrop Vice President Al Myers, however, told shareholders no progress has been made. Myers has said shareholder approval was critical to keep Northrop Grumman's takeover attempt alive.
The Los Angeles-based defense contractor has been trying to go directly to shareholders after TRW's board twice rejected Northrop Grumman bids as inadequate.
Northrop Grumman would sell off TRW's auto parts business. TRW has proposed its own split-up plan. The TRW board has said its plan would be worth more than Northrop Grumman's current offer.