Martin raced Northrop to acquire Grumman


Grumman Corp. was being wooed by a huge California defense contractor when it agreed earlier this week to be acquired by Martin Marietta Corp. But analysts said yesterday that they do not anticipate a bidding war to break.

In documents filed with the Securities and Exchange Commission yesterday, Grumman disclosed that Northrop Corp. had made an offer to purchase Grumman.

The documents also show that Martin Marietta was anxious to move rapidly and sweetened its offer as a means to discourage any rival bids for Grumman.

In a Feb. 21 letter to Renso L. Caporali, chairman and chief executive of Grumman, Norman R. Augustine, the head of Martin Marietta, said the proper form for a consolidation of the two companies would be a "stock-for-stock merger at market."

"However, given the desire to avoid a debilitating and unpredictable auction process, we believe that an all-cash offer at a full price provides the greatest chances for a successful combination without interference from outside parties," Mr. Augustine wrote.

Martin officially announced its $55-a-share offer Monday morning after Grumman's stock had posted an 8 percent rise in heavy trading the previous Friday.

Northrop, a Los Angeles-based defense contractor best-known for its production of the B-2 stealth bomber and F-18 Hornet fighter plane, had indicated as recently as Feb. 25 that it was ready to make a $50-a-share offer for Grumman.

"We would also be prepared to consider an offer at a higher level, if warranted, based upon any additional information or analysis you may wish to provide us," Kent Kresa, chairman and chief executive of Northrop, said in a Feb. 25 letter to J. Robert Anderson, Grumman's vice chairman and chief financial officer.

Northrop officials declined to comment yesterday on whether it plans to submit a higher bid for Grumman, or if there were additional talks between the two companies. A Grumman spokeswoman also declined to comment.

Charles P. Manor, a spokesman for Martin Marietta at its corporate headquarters in Bethesda, said the company "learned a lot in recent years" when it comes to acquisitions. He said the company likes to do things fast. "We make up our mind, and we move out," he said.

Paul N. Nisbit, president of JSA Research of Newport, R.I., which concentrates on the defense and aerospace industries, ruled out any bidding war such as the one that Martin found itself in during the summer of 1992 when it was vying for LTV Corp.'s missile and aerospace divisions against a team headed by Loral Corp. that included Northrop and the Carlyle Group.

After a bitter battle in which each side raised its bid several times, the Loral team eventually won out.

"Someone could come in with a $58 offer, but I would really be surprised," said Mr. Nisbit.

Grumman's stock closed at $55 yesterday, up 75 cents.

Mr. Nisbit said Grumman is very happy with the Martin Marietta offer and said any other bid would have to be a hostile move. "Caporali had the opportunity to go with Northrop, and he turned it down," Mr. Nisbit said.

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