US defence and auto parts group TRW has agreed to a takeover by Northrop Grumman for up to $7.6 billion in one of the largest corporate deals in the defence industry since the industry last consolidated in the 1990s.
Northrop signed the deal late yesterday, sources said, after its improved offer proved superior to what three other companies had offered for TRW's defence assets.
During the last four months a potential TRW-Northrop deal has grabbed the attention of most of the defence sector at a time when the US government and its allies have been increasing defence spending following the September 11th attacks on US soil.
The agreed price is an improvement over about $7.25 billion informally offered last week.
The deal would strengthen Northrop's position in satellite communications and missile systems and put it in the top of the league of global defence firms, giving it enough size to challenge Boeing, Lockheed Martin Corp and BAE Systems when bidding for big defence contracts.
The deal comes less than four years after Northrop itself was a bid target for rival Lockheed but was saved after Washington authorities effectively blocked the move over Pentagon concerns for maintaining sufficient competition in the US defence electronics industry.