TRW TO SHED ITS AUTO PARTS UNIT.

Byline: Gregory J. Wilcox Staff Writer

TRW Inc. said Wednesday it wants to spin off its big auto parts business, and the company's board reiterated a request that shareholders reject Northrop Grumman Corp.'s $5.9 billion hostile takeover attempt.

The Cleveland-based company, trying to fend off the unwanted advance, said preliminary discussions are under way for the sale of all or part of its automotive business and the sale of its aeronautical systems group.

This is the first time that TRW has said it would jettison the auto parts business, which accounts for 64 percent of the company's sales, 58 percent of its profits and 70,000 employees.

When Century City-based Northrop Grumman made its unsolicited $47- a-share offer Feb. 24, the company said it also would sell the automotive unit.

The company also said it has talked to several potential buyers for the automotive business.

TRW is a powerhouse in this sector, holding the No. 1 or No. 2 market share for air bags, seat belts, antilock brakes, foundation brakes, engine valves and fasteners.

In a presentation for Wall Street analysts, the company said it is well positioned to take advantage of economic trends developing as the company continues to recover from recession and war.

For example, auto industry analysts have raised their forecast for 2002 North American automotive light-vehicle production from between 15 million and 15.3 million vehicles to between 15.7 million and 15.9 million units.

And the country's defense budget is projected to have a 7.2 percent compound annual growth rate through 2006. TRW believes its space and defense businesses are in the ``sweet spot'' of this growth.

``TRW has been examining a potential separation of our automotive business for some time,'' said company chairman Philip A. Odeen. ``We believe that our strategic plan announced today will create two 'pure play' independent businesses, each positioned to deliver superior growth and returns.''

Odeen also said Northrop Grumman's $47-a-share offer is grossly inadequate and does not reflect the value of his company's technology and market leading positions.

Northrop Grumman fired back with its own release in which company chairman and chief executive officer Kent Kresa chastised TRW directors and accused the company of withholding information.

``If TRW's board and management want to maximize shareholder value, as they stated in today's release, then we would encourage them to sit down with us immediately to begin the process of negotiating a transaction that is in the best interests of the shareholders of both our companies,'' Kresa said in his statement.

``TRW continues to hold us at arm's length and deny us access to information that could support its claim that an offer of greater value is warranted.''

Analyst Paul Nesbit at JSA Research Inc. in Newport, R.I., said this kind of corporate posturing is not surprising.

``I guess this is more of a delaying tactic than anything else. It's a nonevent that just keeps the stockholders from doing anything,'' he said.