Auto Suppliers In $7B Merger

TRW Inc. is buying Britain's LucasVarity PLC for $7 billion in cash in a combination of automotive suppliers.

The deal announced Thursday comes only days after LucasVarity rejected a $6.5 billion cash and stock offer from Federal Mogul Corp. and disclosed it was talking to another potential bidder it did not identify.

TRW makes automobile airbags, seat belts and other car parts, defense and aerospace equipment and information technology. London-based LucasVarity makes auto brake systems, aerospace and missile equipment.

LucasVarity, which wants to move its headquarters from London to the United States, had been negotiating with several U.S. auto parts companies, including TRW and Tenneco Inc.

TRW is offering about $47.35 for each LucasVarity share. Directors of both companies have approved the deal.

TRW said the deal would lead to savings of $200 million annually within two years. The combined company will have annual revenues of nearly $19 billion.

Victor Rice, chief executive officer of LucasVarity, will be named vice chairman of TRW and will direct the combined automotive operations of the company.

Joseph Gorman, TRW's chairman and chief executive, said the deal will allow his company to integrate TRW's steering and suspension business with LucasVarity's braking business to create the "next generation of vehicle control systems."

Written By Thomas J. Sheeran, Associated Press Writer