Although Automotive accounts for over 60% of TRW's sales, $10.5 billion in 2001, the company had been trying to divest the entire operation -- even before TRW put itself up for sale. Once TRW announced it was willing to be acquired, none of the potential buyers were interested in a TRW which might include the difficult-to-run and marginally profitable Automotive group.

After several false starts with other potential buyers, Northrop Grumman emerged as the front runner in early July after an initial hostile takeover bid. However, an important part of Northrop's acquisition agreement hinged on TRW divesting the Automotive Group, or at least having a buyer lined up. TRW reached an earlier agreement to divest TRW Aeronautical Systems. Northrop is only interested in TRW's sensors, space technology, electronics and systems businesses -- resources it needs to better compete with Lockheed-Martin and Boeing for large U.S. satellite and defense projects.

Northrop is so anxious to be rid of TRW Automotive that it accepted a less-than-ideal arrangement which left it still a part owner. Blackstone will pay $3.76 billion in cash and $600 million in securities to Northrop. Northrop will then still hold a 42% share of TRW Automotive, worth $368 million. Once the cash transactions are complete, Northrop will sell off half of its TRW Automotive shares via Blackstone and end up with 20% ownership in the end business.

The Blackstone Group had originally partnered with the Carlyle Group (USA) in a joint acquisition negotiation, said to be worth upward of $5 billion in cash. Carlyle recently withdrew from the partnership, leaving Blackstone in sole control.

Carlyle recently spent $880 million to acquire Rexnord, and its five bearing operations, from Invensys plc (U.K.).

The Blackstone Group, founded in 1985, is a private equity investment firm which invests in all types of businesses, primarily mature operations with an established management team and track record. It has over $14 billion under management, invested in over 60 businesses. Blackstone recently raised the world's largest private equity fund, at $6.45 billion, in Blackstone Capital Partners IV. The acquisition of TRW Automotive is the first investment by this fund.

TRW Automotive is a major OEM supplier of automotive systems, modules and components; sales last year were over $10.5 billion. It is the 8th-largest Tier 1 (direct-to-OEM) auto parts manufacturer, and is the leading supplier of automotive safety systems. TRW Automotive operates in three sectors: Chassis (brakes, steering, suspension, including bearings), Occupant Safety (air bags, seat belts, steering wheels, electronics), and Other Automotive (valves, components, fasteners). The company currently employs over 67,000 people around the world.

TRW Automotive is an important Tier 1 purchaser of bearings and seals for its suspension corner assemblies and many other of components.