TRW, the military contractor that has agreed to be sold to Northrop Grumman, is close to a deal to sell its automotive parts business to the Blackstone Group for about $US4.6 billion after months of off-and-on negotiations, executives close to the discussions told The New York Times (NYT) yesterday.
Citing the executives, the NYT said the deal could be announced by next week though there is caution that the talks could still fall apart. TRW came close to selling the automotive parts business in August for about $5 billion to Blackstone and the Carlyle Group, but the deal collapsed when the bidders had misgivings about the price, the NYT added.
The New York Times cited the executives saying that, now the asking price has come down and The Carlyle Group has dropped out, TRW and Blackstone have agreed to the deal in principle and are working out the details. Blackstone and Carlyle decided to part company after several disagreements about how much they would bid, the executives told the NYT.
The NYT said Northrop had planned to sell TRW’s automotive unit itself once the deal with Northrop was completed, but the quick sale by TRW will make integrating the companies easier and will help it reduce debt more quickly. Northrop is still waiting for approval of its TRW deal from Pentagon and antitrust officials and TRW had agreed to sell its aeronautics business to Goodrich for $1.5 billion before its deal with Northrop to make itself even more attractive, the New York Times added.
The newspaper said the vehicle parts business generated $10 billion of TRW’s $16.4 billion revenue in 2001, but it has faced increased competition in recent years in addition to a sluggish United States economy.
After TRW rejected Northrop’s initial offer and the bid turned hostile, TRW said in March that it would spin off the automotive unit within nine months, the New York Times said. At the time, it said that it had begun preliminary talks with other companies that had expressed interest in buying all or part of the business, the newspaper added.