Goodrich buys TRW's aeronautical arm for £1bn

TRW, the US defence and automotive group being stalked by Northrop Grumman and BAE Systems, yesterday sold its aeronautical systems division to a rival US contractor for $1.5bn (£1bn).

The sale of the division to Goodrich Corporation will not change BAE's interest in TRW since this is one of the bits of business that it was not interested in anyway.

BAE is holding talks with TRW about buying its space and defence systems businesses as the US group seeks to escape Grumman's bid by splitting itself up.

Grumman, which has tabled a hostile $53-a-share bid for TRW valuing the company at $6.7bn, has extended its offer to a week on Friday. TRW's directors have rejected the bid arguing it is too low.

For BAE, led by its chief executive Mike Turner, the disposal of TRW's aeronautics division is a positive move since it would simplify the takeover of the remainder of the group.

BAE is not interested in TRW's automotive business, which accounts for more than half of group turnover. It indicated again yesterday it would not launch a bid for the entire group, even if Grumman were to raise its offer and the TRW management accepted the bid.

TRW has filed for approval from the US Securities and Exchange Commission to spin the automotive division off into a separate company. This would allow BAE to go ahead with the clean purchase of just the assets it is interested in.

The aeronautics business being bought by Goodrich is based in Solihull in the West Midlands and employs about 3,000 UK staff. It was formerly owned by Lucas, the UK engineering company which merged with Varity and was then taken over by TRW. It made operating profits last year of $180m on revenues of $1.1bn.

Goodrich said it expected to achieve $30m to $40m of cost savings by integrating the TRW business with its own aerospace activities. This has led to fears of further job losses in the UK.

The engineering union Amicus said it was seeking talks with management over the future of staff at the company's UK sites. In addition to the plants around Birmingham, there are sites at Huyton of Merseyside, Hemel Hempstead in Hertfordshire and Belfast. An Amicus spokesman said: "We are determined to protect the terms and conditions of our members who work there. We are hopeful that any job cuts will be kept to a minimum."

Goodrich said it was "premature" to talk about job losses.