Northrop Grumman Corporation has signed an agreement to sell TRW Automotive to the Blackstone Group for $US4.725 billion.
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The Blackstone Group, a leading private investment firm, recently raised the world’s largest private equity fund at $6.45 billion, and the purchase of TRW Automotive will be the first investment made by this fund.
Under the terms of the agreement, which is conditional on the closing of the Northrop Grumman/TRW merger, the seller will receive $4.725 billion, comprised of $3.757 billion in cash, $600 million in debt securities and an initial $368 million equity interest (approximately 42% of total equity of $868 million) in TRW Automotive.
The parties intend to reduce their initial equity positions in TRW Automotive before closing.
At the close of the transaction, anticipated to be in the first quarter of 2003, the seller’s equity interest is expected to be approximately 20%, which would increase total cash consideration to between $3.9 billion and $4.0 billion.
Cash proceeds from the sale of TRW Automotive, along with the proceeds already received from the completed sale of TRW Aeronautical Systems, will be used to pay down debt. All financing necessary to complete the transaction has been provided by JP Morgan, Credit Suisse First Boston and Lehman Brothers.
The Northrop Grumman and TRW shareholder votes on the merger are scheduled for December 11, 2002.
