Northrop exec spells out TRW boost

Information technology and homeland security capabilities are two complementary areas that would benefit from Northrop Grumman Corp.'s attempt to buy TRW Inc., according to Northrop's president.

Northrop's $5.9 billion takeover bid would result in combined estimated sales of about $27 billion in 2003 and would bring together the companies' homeland and IT offerings, said Ronald Sugar, who is also Northrop's chief operating officer.

Northrop Grumman is seeking to acquire TRW as part of its long-term strategy to improve its space business, add communications technology and capabilities, and enhance its IT business, Sugar said.

Northrop's original offer came just days after the unexpected announcement that TRW chief executive officer David Cote had resigned to join Honeywell International Inc. The bid became hostile with TRW's March 3 rejection of that offer.

Sugar, speaking at a March 6 media briefing at the National Press Club in Washington, D.C., said the proposed merger of the two defense contracting behemoths would enhance their combined C4ISR (command, control, communications, computers, intelligence, surveillance and reconnaissance) offerings and anything that does that is a benefit to shareholders.

He added that baggage screening systems and border surveillance were just two examples of areas where the combined companies could excel.

Northrop Grumman Information Technology, which has about $4 billion in revenues and is the corporation's second largest division accounting for 24 percent of its business, also would benefit from the merger, Sugar said. Northrop Grumman IT includes Logicon Inc., Comptek Research Inc., Federal Data Corp., Sterling Software Inc.'s federal group and Litton Industries Inc.

"IT is a growing business for us going forward, and TRW's [offerings] are very complementary with similar strengths," he said. "It's such a broad and large market, there's plenty of room for consolidation."