Joseph Gorman, chairman emeritus of TRW Inc., isn’t happy with what’s happening to the firm he led for years. In fact, he’s downright uncomfortable with the situation in which Northrop Grumman is trying to force a hostile takeover of the aerospace and automotive giant. And, he says, it could have been avoided.
“It wouldn’t have happened if I’d still been chairman,” Gorman told a group of more than 100 Northeast Ohio business leaders last month at The Entrepreneurship Institute’s annual President’s Forum. “The departure of the person who succeeded me (David Cote) is what caused the unfavorable proposal.”
Gorman, a stickler for planning, says the sudden transition to Cote, and Cote’s departure shortly thereafter, left TRW’s long- and short-range plans in question and opened the door for Northrop’s hostile move.
Cote replaced Gorman as CEO in February 2001, and as chairman in July 2001 as his handpicked successor. But Cote jumped ship to Honeywell International in February 2002. That, says Gorman, left the company vulnerable and led to the current situation.
Northrop has an offer on the table of $53 per share, and is pushing TRW shareholders — and the board — to sell. The California-based defense contractor is poring over TRW’s books and may up the ante.
In response, TRW has begun looking at ways to sell off noncore subsidiaries in an attempt to strengthen shareholder value. In June, it filed a registration statement with the SEC to allow it to consider spinning off its automotive division. It’s a move that, if pursued will, says current TRW Chairman Philip Odeen, strengthen the company’s position — and value — for shareholders.
