News

DATE=7/17/98 TYPE=CORRESPONDENT REPORT NUMBER=2-235631 TITLE=LOCKHEED / NORTHROP (L ONLY) BYLINE=LARRY FREUND DATELINE=NEW YORK CONTENT= VOICED AT: INTRO: TWO OF THE LARGEST AMERICAN DEFENSE INDUSTRY MANUFACTURERS HAVE SCRAPPED THEIR PLANS TO MERGE IN THE FACE OF STRONG OPPOSITION FROM THE U-S GOVERNMENT. CORRESPONDENT LARRY FREUND REPORTS FROM NEW YORK. TEXT: THE TWO GIANT COMPANIES -- LOCKHEED MARTIN AND NORTHROP GRUMMAN -- HAVE IN EFFECT CONCEDED DEFEAT AT THE HANDS OF GOVERNMENT OFFICIALS CONCERNED THAT THE PLANNED MERGER WOULD HAVE CREATED A GIANT MONOPOLY. THE PLANNED MULTI-BILLION DOLLAR MERGER, ANNOUNCED LAST JULY, WOULD HAVE CREATED THE WORLD'S LARGEST DEFENSE MANUFACTURER. THE CANCELLATION OF THE MERGER, ANNOUNCED BY COMPANY EXECUTIVES, FOLLOWED THE BREAKDOWN OF TALKS WITH THE PENTAGON AND THE PROSPECT OF A TRIAL ON THE GOVERNMENT'S MOVE TO BLOCK THE PROPOSED COMBINATION. THE CANCELLATION IS A NEW CHAPTER IN THE SIX-YEAR-OLD CONSOLIDATION OF THE U-S DEFENSE INDUSTRY. THAT PROCESS IS SUGGESTED BY THE VERY NAMES OF BOTH FIRMS, INDICATING PAST MERGERS: LOCKHEED WITH MARTIN-MARIETTA, NORTHROP WITH GRUMMAN. LOCKHEED CHAIRMAN VANCE COFFMAN SAYS HIS COMPANY'S INABILITY TO REACH AN AGREEMENT WITH THE DEFENSE DEPARTMENT AND THE TRIAL SCHEDULED FOR SEPTEMBER NECESSITATED THE DECISION TO CANCEL. THE GOVERNMENT, THROUGH THE JUSTICE DEPARTMENT, HAD CHARGED THAT THE MERGER WOULD HAVE VIOLATED U-S ANTI-MONOPOLY LAWS BY ENDING COMPETITION IN SEVERAL AREAS. A JUSTICE DEPARTMENT OFFICIAL SAYS THE DECISION TO END THE MERGER MEANS THE U-S GOVERNMENT WILL CONTINUE TO RECEIVE WHAT HE CALLS THE HIGHEST POSSIBLE QUALITY OF MILITARY PRODUCTS AT THE LOWEST POSSIBLE COST TO THE TAXPAYER. A MERGER OF LOCKHEED MARTIN AND NORTHRUP GRUMMAN WOULD HAVE LEFT ONLY ONE OTHER U-S COMPETITOR IN THE FIELD, THE BOEING COMPANY WHICH ACQUIRED THE MCDONNELL DOUGLAS AEROSPACE COMPANY LAST YEAR. A SPOKESMAN AT THE PENTAGON SAYS IT HAD FAILED TO NEGOTIATE AN ARRANGEMENT WITH THE COMPANIES TO MAINTAIN COMPETITION IN PRICE AND TECHNOLOGY AND ANSWER THE PENTAGON'S CONCERNS ABOUT THEIR COMBINED POWER. LOCKHEED MAKES THE F-16 JET FIGHTER AND C-130 CARGO PLANE. NORTHROP MAKES THE B-2 BOMBER. (SIGNED) NEB/NY/LSF/JO 17-Jul-98 10:59 AM EDT (1459 UTC) NNNN Source: Voice of America .