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Archive for Tuesday, July 2, 2002

Business Briefcase

July 2, 2002

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Northrop Grumman, TRW agree to $7.8 billion deal

Defense contractor Northrop Grumman Corp. agreed to buy TRW Inc. for $7.8 billion in stock, nearly $2 billion more than it originally offered earlier this year.

The deal announced Monday, reached after four months of wrangling, will make Northrop the nation's second-largest defense contractor with projected annual revenue of more than $26 billion and approximately 123,000 employees.

Northrop said it would swap $60 worth of its stock for each TRW share, or 27 percent more than it had offered in February.

"When we first proposed to acquire TRW, we stated that we were prepared to pay full and fair value for the company," said Northrop chairman Kent Kresa, above left.

TRW chairman Philip Odeen, above right, said for the past several months, the company has "undertaken a comprehensive strategic review with the sole objective of enhancing shareholder value. This transaction achieves that objective."

Economy: Manufacturing rebounding; construction spending dips

Manufacturing knocked down by last year's recession turned in its strongest performance in nearly 2 1/2 years in June, but spending on construction dipped to a five-month low the month before.

The latest snapshot of the economy Monday suggested the recovery remained on track but improvements were spotty, economists said.

The Institute for Supply Management's manufacturing index jumped to 56.2 in June, the highest level since February 2000, and up from a reading of 55.7 in May. An index above 50 signifies growth in manufacturing, while a figure below 50 shows contraction.

Construction spending turned out to be weaker than expected. The value of all construction projects dropped 0.7 percent in May to a seasonally adjusted annual rate of $852 billion, the lowest level since December, the Commerce Department said.

Agriculture: Wheat harvest nears end

Dry conditions in most of central and western Kansas is stressing spring-planted crops and forcing many farmers to fallow more land than usual, Kansas Agricultural Statistics Service said Monday.

In its weekly crop weather report, the agency also said grasshoppers are becoming a widespread problem.

Winter wheat harvest is 87 percent complete, compared to just 72 percent at this time last year, KASS said.

Among other crops:

Corn condition is rated as 1 percent very poor, 10 percent poor, 37 percent fair, 46 percent good, and 6 percent excellent.

Soybean condition is 6 percent poor, 37 percent fair, 51 percent good and 6 percent excellent.

Wall Street: Merck delays public offering

For the second time in less than a week, drug giant Merck & Co. on Monday postponed a planned initial public stock offering for its pharmacy benefit management subsidiary, Medco Health Solutions Inc., people familiar with the matter said.

The 46.7 million-share IPO was originally scheduled for last Friday, but it was postponed until sometime this week. At the time, Whitehouse Station-based Merck cut the expected price range for shares by $2, to between $20 and $22. At those prices, the sale could raise $934 million to $1.027 billion.

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