Northrop May Give Some Litton Shareholders Stock, Not Cash

Los Angeles-based defense contractor Northrop Grumman Corp. said Tuesday it may amend its $3.8-billion merger deal with Litton Industries Inc. to give some Litton shareholders tax-free Northrop stock instead of cash.

Northrop, the nation’s No. 5 defense contractor, said it was holding talks with Litton and the military shipbuilder’s largest shareholder, Unitrin Inc., about the possible change. Any such amendment, if implemented, should not affect the current cash tender offer for all of Litton’s outstanding stock, Northrop said.

The possible change to the terms of the deal, announced in December, would include no more than 14 million common shares and about $350 million of new convertible preferred Northrop stock.

The move would give Litton shareholders stock in the combined company and would be designed to allow a tax-free exchange of Litton stock for Northrop stock, Northrop said.

Northrop repeated that it expects the acquisition of Woodland Hills-based Litton to boost its earnings before pension income and amortization by 7% to 10% in 2001.

In New York Stock Exchange trading, Litton shares fell 6 cents to close at $78.94, and Northrop shares rose 44 cents to close at $87.31. Unitrin shares fell 6 cents to close at $37.94 on Nasdaq.