CFE said:
Did the Northrop-Grumman ATA teaming help in any way to grease the skids for the Northrop-Grumman merger?
It wasn't a merger of equals. Northrop brought Grumman for $2.1 billion. They pipped Martin Marietta ($1.9 billion) saving the world from the company name "Martin Grumman"... Though interestingly Grumman approached Northrop first with private talks for the takeover which broke down leading to Martin Marietta being the public merger buyer and then Northrop beat them to the Bethpage Iron Works prize with a higher offer.
NORTHROP BESTS MARTIN MARIETTA TO BUY GRUMMAN
By CALVIN SIMS,
Published: Tuesday, April 5, 1994, New York Times
The Northrop Corporation won the final round today of a heated battle for the Grumman Corporation, the venerable Long Island military contractor. Grumman had decided to seek a merger in the face of its own diminished prospects and declining military spending in the post-cold-war world.
In the monthlong fight for Grumman, Northrop wound up triumphing over the Martin Marietta Corporation by agreeing to pay $62 a share, or a total of $2.1 billion. Northrop's bid exceeded Martin Marietta's by $7 a share, or about $170 million. The Martin Marietta deal would have been worth $55 a share, or $1.93 billion.
Faced with drastic cuts in military spending, weapons contractors have adopted a strategy of acquiring businesses in markets they can dominate and selling off the rest. A deal for Grumman, based in Bethpage, L.I., represented a rare opportunity to acquire a large contractor with a variety of strong weapons programs.
While Grumman has lucrative contracts in military electronics programs, large components for commercial aircraft, and computer information systems and software, the company does not have enough long-term contracts to become a leading force in those areas. Therefore, Grumman officials determined that the company would be better off merging with another contractor than going it alone.
The agreement reached today put an end to the initial plan to merge Grumman with Martin Marietta that was announced publicly on March 7 after Grumman broke off private talks with Northrop.
Under the terms of that agreement, Grumman agreed to pay Martin Marietta $50 million for tearing up the deal and accepting Northrop's richer offer. Martin Marietta said Grumman paid that money today.
Also, Grumman is required to pay up to $8.8 million of Martin Marietta's investment-banking and legal fees and other expenses from the battle.
In the end, Northrop, a weapons maker based in Los Angeles, raised the ante to a level that Martin Marietta believed was too much to pay even for Grumman's highly prized operations in a weapons industry consolidating rapidly amid shrinking Pentagon budgets.
Almost everybody expects layoffs in Grumman's Long Island plants as the merger jells. Grumman acknowledged last month when it announced its plan to link up with Martin Marietta that it would eventually have to eliminate thousands of jobs on Long Island, where 8,900 Grumman workers, or nearly half the total work force of 18,000, are based. With the combination of Grumman and Northrop, industry analysts predicted that 10 to 12 percent of the total work force, which will be more than 40,000 people, would be laid off.
Grumman had agreed on March 7 to merge with Martin Marietta, based in Bethesda, Md., for $55 a share, but was later forced to consider a hostile bid of $60 a share from Northrop, which is best known as the builder of the costly B-2 long range bomber.
Grumman, which had asked both suitors to submit their best offers by 5 P.M. last Thursday, said in a statement today that its board had unanimously approved Northrop's $62-a-share tender offer. Martin Marietta did not increase its offer of $55 a share. Would Not Budge
Phil Giaramita, a Martin Marietta spokesman, said today that the company had determined that $55 a share was what Grumman was worth and that based on its long-term policy, Martin Marietta would not overpay.
"Martin Marietta is a healthy corporation and we have made numerous acquisitions in the past," Mr. Giaramita said. "We are in a position where we can sit back and wait for the right opportunity. Grumman was the right opportunity at $55 a share, but not at $62."
Winning Grumman is a big victory for Northrop, which had failed in two previous attempts to acquire large weapons businesses and was under pressure to make an acquisition or face being swallowed by another military contractor.
Merging with Grumman is also a personal conquest for Kent Kresa, Northrop's chairman, president and chief executive, who was said by friends and associates to be angry that Grumman officials struck a secret merger agreement with Martin Marietta despite a yearlong courtship by Northrop. Mr. Kresa has said that his unrelenting pursuit of Grumman was purely business.