Magazine article American Banker

Northrop Said to Bar 2 Banks in Grumman Bid

Magazine article American Banker

Northrop Said to Bar 2 Banks in Grumman Bid

Article excerpt

When Northrop Corp. looked for banks to back in its $2 billion hostile offer for Grumman Corp. last week, two of its principal lenders were already in the opposing camp.

Bank of America and Morgan Guaranty Trust Co., the two banks backing Martin Marietta Corp.'s friendly $1.9 billion merger agreement with Grumman, also have strong ties to Northrop.

Just recently, the two banks and Chemical Bank were coagents on a $400 million credit for Northrop that was led by Chase Manhattan Bank, Northrop's agent bank for over 50 years.

Eliminated from Consideration

Chase and Chemical are the lead banks backing Northrop's bid for Grumman, but Banks of America and Morgan Guaranty were eliminated from consideration, sources said, because of their role in the Martin Marietta bid.

In the 1980s, banks often worked both sides of the fence in corporate takeovers.

Exclusively Pact Required

In the contest for RJR Natbisco, for example, Manufacturers Hanover Trust Co. worked with two rival bidders, Forstmann Little & Co., and Kohlberg Kravis Roberts & Cod. KKR ultimately won. Hanover later merged with Chemicals.

These days, clients seem less willing to allow banks that leeway.

In the recent concluded battle for Paramount Communications Inc., Viacom Inc. required its lead banks to sign an exclusivity agreement, prohibiting them from working with other Paramount suitors.

After a portracted battle, Viacom beat out QVC Networks Inc. …

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