Northrop Grumman Corporation announced today that it has signed a definitive agreement to sell the automotive business of TRW to the Blackstone Group in a deal that values TRW Automotive at $4.725 billion.
The Blackstone Group, a private investment firm, recently raised the world’s largest private equity fund at $6.45 billion, and the purchase of TRW Automotive will be the first investment made by this fund.
Under the terms of the agreement, which depends on the closing of the Northrop Grumman/TRW merger, the seller will receive $4.725 billion, comprised of $3.757 billion in cash, $600 million in debt securities and an initial $368 million equity interest in TRW Automotive. The parties intend to reduce their initial equity positions in TRW Automotive before closing.
Cash proceeds from the sale of TRW Automotive, along with the proceeds already received from the completed sale of TRW Aeronautical Systems, will be used to pay off debt.
Northrop Grumman and TRW shareholder votes on the merger are scheduled for December 11, 2002. The sale of TRW Automotive is also subject to customary closing conditions including review under the Hart-Scott-Rodino Act and obtaining certain other governmental and regulatory approvals in the US and Europe. The sale of TRW Automotive is expected to close in the first quarter of 2003.