Northrop Grumman has completed its takeover of TRW, becoming the USA's second-largest defence company behind Lockheed Martin and ahead of Boeing. The merger will boost revenues from over $19 billion this year to $25-36 billion in 2003.
The takeover was approved by the US Department of Justice after the companies signed a consent decree intended to assure continued competition for satellite payloads. Lockheed Martin had opposed the merger on the grounds it would combine the major US payload suppliers.
The consent decree does not require Northrop Grumman to divest any businesses, and the merger boosts the company's space systems, missile defence and information warfare businesses.
TRW Systems becomes Northrop Grumman Mission Systems and TRW Space & Electronics becomes Northrop Grumman Space Technology.
TRW was able to reduce its substantial debt burden in the run up to the merger with the sale of its Aeronautical Systems business to Goodrich and its Automotive business to the Blackstone Group. Northrop Grumman says the merged company's debt-to-capital ratio is a comfortable 26% and will be reduced to 13% by the end of 2005.
The merger leaves Raytheon a distant fourth in the US defence industry league table, with sales last year of just under $17 billion. There have been rumours that the company is being courted by General Dynamics, but Raytheon has financial issues that could be blocking a take-over bid. These include lingering liabilities on major projects at the former Raytheon Engineers & Constructors.
Source: Flight International
