Merger Courtship

It’s heavy-duty lawyer-time in the battle over the proposed $11.6-billion merger of Northrop Grumman Corp. and Lockheed Martin Corp.

The merger controversy has moved into the courtroom, and a federal judge said Thursday he is “inclined” to grant the defense companies an early trial date in the government’s antitrust case.

The Justice Department, which filed suit Monday to block the mega-merger, argued at a scheduling hearing for an October trial to give it more preparation time. U.S. District Judge Emmet Sullivan said he supports a trial date in late June or early July but asked the two sides to work out a date.

The antitrust lawsuit, backed by the Department of Defense, alleges that the combination of Northrop Grumman and Lockheed Martin would squelch competition and innovation in several key defense markets.

Meanwhile, some Northrop executives are voluntarily opting for new two-year restrictions on some stock. The move could quell any brewing resentment from shareholders, who would lose out on potential profits if the merger fails but must pay for big stock plans for executives with or without the merger.

They have reason to be upset: Northrop must now book about $180 million in write-offs, most of it earmarked to pay for a stock plan covering 450 executives that was approved by shareholders last month amid rampant optimism the merger would close without trouble.

Northrop may have no choice but be generous to top executives, given that they may have been shopping for new jobs and stand to lose millions in stock gains and severance deals if the merger collapses.

Stung by Boeing Co.’s recently announced plans to cut about 6,000 jobs at Long Beach and other California facilities, an engineers union is urging co-workers with Boeing stock to fight back.

The Southern California Professional Engineering Assn., which represents about 4,000 white-collar workers at Boeing’s Long Beach operations, is asking colleagues to support a shareholder proposal requiring Boeing to hire investment bankers to explore selling the former Douglas jet-building business.

That’s “Proposal 9,” submitted by Frederick P. Eade of Redondo Beach and set for a vote at Boeing’s annual meeting on April 27.

Eade’s proposal calls for commercial work in Long Beach to be sold off to save Boeing from “an expected write-off of nearly $1.4 billion” and to allow Boeing officers to focus on the problems in Seattle.

The labor union sees it differently.

“We believe losing 60% of the jobs in the next two years is not a winning long-term strategy,” the union said in a flier. “We deserve a fair evaluation of our potential, and Proposal 9 is our way of requesting that evaluation.”

Boeing is unimpressed with both rationales, and the board of directors is recommending a “no” vote on Proposal 9.

“We took a look at that before the merger was consummated,” said Boeing spokesman Larry McCracken. “Obviously, we disagree with them.”

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What costs $25 million, weighs 1 million pounds, can withstand temperatures ranging from -300 degrees to 250 degrees and lives in El Segundo?

It’s the massive new satellite-testing chamber at Hughes Space & Communications, unveiled last week to workers and dignitaries.

The new mailbox-shaped “thermal vacuum chamber,” which includes a door that weighs 105 tons and takes more than five minutes to mechanically open, is so large that Hughes had to construct a special building for it.

It can accommodate Hughes’ largest satellite or can test two smaller satellites simultaneously. The company’s other two test facilities are not big enough to handle Hughes’ new larger satellite, the HS 702.

But size was only part of the equation. Hughes has orders for 37 satellites, and demand is growing.

As part of a $150-million investment in its operations in El Segundo, the company in recent years has added 2,000 employees and expanded production, only to face a bottleneck at the testing phase.

With the addition of the new chamber, Hughes has the space to test up to four satellites simultaneously in all of its facilities.

Since the facility’s dedication last week, Hughes has landed three more satellite orders: two from American Mobile Radio Corp. for its digital radio service and one from PanAmSat Corp. for direct-to-home television service in South America.