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TRW accepts Northrop's merger bid for $7.8 billion

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After four months of tense negotiations, arms and auto-parts maker TRW (NYSE:TRW) $56.98 agreed to Northrop Grumman's (NYSE:GOC) $125 sweetened merger offer, creating the second- largest defense contractor in the United States, with some $26 billion in projected annual revenues and roughly 123,000 employees.

Under the terms of the deal, Los Angeles-based Northrop will offer between 0.4348 and 0.5357 shares for each TRW share.

After completion of the merger, Northrop Grumman (NOC) plans to separate TRW's automotive business, either through a sale or spin-off of the business to shareholders.

Northrop also reaffirmed its earnings outlook for 2002 of between $6.60 and $7.10 per share and expects profits to grow at a double-digit pace in 2003 and 2003. Including TRW, the company expects earnings to be in the range of $7.75 to $8.30 per share in 2003.

Messier resigns from Vivendi Universal

After seeing its stock price decline some 60% in the first-half of the year, French media group Vivendi Universal's (NYSE:V) $21.50 CEO Jean Marie Messier agreed to resign after the company's board of directors sent him a no-confidence vote over the weekend. Mr. Messier agreed to resign on Sunday and a full statement would be made later today. The board of directors said it would ask Jean-Rene Fourtou, deputy chariman of Franco-German chemicals and drugs group Aventis to take over for an interim period of six months. Shares of Vivendi jumped 14.4% to E25.03 in overseas trading.

WorldCom set to resume trading

Shares of WorldCom (NASDAQ:WCOME) $0.83 are set to resume trading today and are the most active in pre-market trading at $0.07. The stock was halted last week after the phone giant confessed to hiding $3.8 billion in operating expenses. Under NASDAQ procedures, the "E" is added to an existing symbol to designate a company that is delinquent in its filings to the Securities and Exchange Commission.

MCI Group (NASDAQ:MCITE) $1.68, the company's consumer long- distance business, is still halted pending a NASDAQ request for information on MCI's dividend.

WorldCom (WCOME) had already announced it would reincorporate MCI back into the parent company and eliminate the dividend.

Stock futures mixed

Stock futures are mixed as the opening bell approaches. S&P futures (sp02u) are edging up 1.10 points to 991.20. NASDAQ futures (nd02u) are slipping lower by 1 point at 1,053 and Dow futures (dj02u) are higher by 28 points at 9,258.

Fair value for the S&P 500 today is $1.45. That price will not change during the session. HL Camp & Company has their computers set for program buying at $2.65 and set for selling at $-0.73. Fair value for the NASDAQ-100 today is $4.60.

Jeff Bailey
Senior Market Technician
Option Investor

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