Grumman Corp. accepted Northrop Corp.'s $2.17 billion merger offer yesterday, capping a monthlong takeover battle and ending Martin Marietta Corp.'s attempts to buy the Bethpage, N.Y.-based defense contractor.
Northrop won the bidding with an offer of $62 a share, beating Martin Marietta's bid of $55 a share.
Grumman's announcement that it has entered into a merger agreement with Northrop ended a wild month during which takeover stock traders sensed a bloody bidding war and sent Grumman's stock soaring. At one point Grumman shares were trading at close to $66, nearly 80 percent above its price just days before its announced merger agreement with Martin Marietta.
L Grumman's stock fell $2.9375 yesterday to close at $61.6875.
But the fiercely contested bidding war that some analysts anticipated never erupted. Northrop actually ended up topping its own earlier offer of $2.04 billion, equal to $60 a share. It had offered $62 a share last week, but that bid was rejected by Grumman's directors, who insisted that its suitors submit their "best and highest offer" in sealed bids in time to meet a 5 p.m. deadline last Thursday.
Northrop's chairman, Kent Kresa, said yesterday that he anticipates a smooth transition and reaffirmed his earlier pledge of having the combined companies' name changed to Northrop Grumman Corp.
"We continue to believe that consolidation is the only sensible answer to the over-capacity in our industry, and the combined strengths of our two companies will make Northrop Grumman a formidable competitor," Grumman Chairman Renso L. Caporali said.
In a filing with the Securities and Exchange Commission yesterday, Northrop disclosed that it was willing to pay up to $66 a share for Grumman and would have given "serious consideration" to an even higher bid.
MA Martin Marietta's chairman, Norman R. Augustine, stood by the
company's $55 a share offer, calling it a fair offer. He said a higher bid would not have been in the best interest of Martin Marietta stockholders.
Martin Marietta, based in Bethesda, initiated the battle for defense contractor Grumman when it announced on March 7 that it had reached a merger agreement with Grumman.
Phillip S. Giaramita, a spokesman for Martin Marietta, said the company has already received a check from Grumman to cover the $50 million "break-up fee" that Grumman agreed to pay if the merger agreement between the two companies was broken.
Martin Marietta also can receive up to $8.8 million more to cover expenses related to its merger agreement.
Paul H. Nisbet of JSA Research in Newport, R.I., was not certain that the battle for Grumman was over. He said he still thinks there is "a fair chance" that Martin Marietta will move against Northrop.
Other industry sources discounted this, noting that Martin Marietta has expressed a preference for not wanting to become involved in hostile takeover situations.
Northrop, headquartered in Los Angles, is best-known for its production of the B-2 stealth bomber, but also makes components usedin the F-18 fighter plane and Boeing 747 jetliner.
Mr. Kresa said a merger of Northrop and Grumman will create a world-class military aircraft design capability in both tactical and surveillance aircraft.
Although Grumman has been the primary supplier of Navy planes since the days of World War II, this business has been in decline in recent years, and last fall the company announced that it was getting out of the military aircraft design business.
Northrop did not say how many jobs would be lost in the consolidation, but said the combined companies would have more than 40,000 workers and annual sales of about $8 billion.