Job fears as Goodrich bags TRW

TRW, the heavily indebted US defence company being stalked by BAE Systems, has offloaded its British-based aeronautical business for $1.5bn (£1bn), raising concern about hundreds of UK jobs.

The division being sold was formerly known as Lucas Aerospace and formed part of the LucasVarity engineering group bought by TRW two years ago for $6.8bn. It is being acquired by another American aerospace company, Goodrich.

The disposal will complicate BAE's controversial plans to launch a $7bn bid for TRW, which has a leading position in the race to develop star wars military and spy satellite technology. BAE has still not decided whether to unleash a full bid but the talks with TRW have been met with deep scepticism in the City. There was no immediate reaction from BAE. The shares fell 2p to 340 1/2p.

The business being sold is headquartered in Solihull in the West Midlands and employs about 3,000 people in Britain. It has a further 3,200 staff overseas and has a total of 22 sites in nine countries, including France, Germany, Canada and America, as well as the UK. It has strong positions in flight control, cargo, engine control and power systems as well as missile technology.

There are almost certain to be job losses following the deal as Goodrich said it hoped to achieve savings of between $30m and $40m over the first three years after completion, which is due in the fourth quarter of this year.

TRW, America's eighth largest defence contractor, has been struggling to control its $6.7bn debt mountain and is known to have been looking at major asset sales to raise cash to offset borrowing. The core former Lucas automotive business employs a further 6,000 people in the UK and may also be sold.

TRW has effectively been on the market since February when a rival contractor, Northrop Grumman, made an unsolicited bid. It said today that it is still 'in the process of sharing confidential information with several interested parties', including BAE.

TRW had already decided to break up the company and pressed ahead with an auction for the aeronautical divisions, knowing that Northrop is mainly interested in defence systems.

Goodrich's chairman and chief executive David Burner said: 'This is a strategically important acquisition for us as we continue to add value by building on our core aerospace base.'

TRW chairman Philip Odeen, said proceeds from the sale would 'accelerate its debt-reduction programmed'.