The US Department of Defence (DoD) will block the Northrop Grumman/TRW merger unless competition in the military space sector is preserved.
The DoD has made that a condition for Department of Justice (DoJ) approval of Northrop Grumman's proposed acquisition of TRW, ahead of an anticipated US Air Force launch next year of the Space-Based Radar (SBR) programme.
Northrop Grumman has said it would be willing to ensure its Baltimore-based Electronics Sensors & Systems Sector and TRW's Redondo Beach-based Space Systems remain accessible to other parts of Northrop Grumman, as well as outside competitors, after the merger. This ensures Northrop Grumman-TRW sensor payloads will still be available to contractors such as Lockheed Martin, which, unlike Boeing, does not have its own in-house sensor capability.
According to sources, the DoD is keen to ensure truly competitive bidding on SBR. The planned constellation of synthetic aperture radar and ground-moving target indicator-equipped satellites is scheduled for initial deployment by 2010. The USAF has secured nearly $48 million in the new 2003 defence budget to accelerate an SBR demonstration/validation effort.
"For the deal to be viewed favourably by the government, there is a requirement for an agreement to ensure free and open competition in the space sensor area and we continue to hold discussions with the DoD and DoJ," says Northrop Grumman. The company is hopeful that a deal can be struck in time for a planned 11 December meeting of both Northrop Grumman and TRW shareholders to vote on the proposed $6.6 billion acquisition.
Northrop Grumman at the same time is negotiating to sell TRW's auto parts business to the Blackstone Group for $4.73 billion, once the acquisition is completed. The deal would bring in $3.9 billion in cash, with the rest made up of debt and equity financing.
Source: Flight International
