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Northrop-TRW decision unlikely before Thanksgiving

By Andrea Shalal-Esa

WASHINGTON, Nov 18 (Reuters) - U.S. officials are unlikely to complete a review of Northrop Grumman Corp.'s planned purchase of TRW Inc. until after the Nov. 28 Thanksgiving holiday, a Pentagon spokesman said on Monday.

"The review continues. I don't expect anything this week at all, probably not before Thanksgiving," said Glenn Flood, a Defense Department spokesman.

Defense analysts and Wall Street traders have been watching the merger review carefully for any sign that the deal could be unraveling, but defense officials and industry sources say they are confident the $6.5 billion merger will be cleared.

The delay appears to be linked to Washington's preparations for a possible invasion of Iraq, as well as hectic work to finalize the 2004 defense budget by Thanksgiving, the officials said. They said they expected a decision in early December.

Pentagon sources said a team headed by Suzanne Patrick, the Pentagon official responsible for industrial policy, and the Pentagon general counsel, had completed its work on the proposed merger, but was still awaiting final approval of the deal by Deputy Defense Secretary Paul Wolfowitz.

With Defense Secretary Donald Rumsfeld in Chile this week for a meeting of Western Hemisphere defense ministers, Wolfowitz is busy running the Pentagon.

Wolfowitz and other top defense officials have been preparing for a possible U.S. invasion of Iraq if Iraq fails to comply with a new strict regime of U.N. weapons inspections.

"There are a lot of things going on now. This issue will have to get the attention of the top decision makers," Flood said.

A QUESTION OF WHEN, NOT WHETHER

Los Angeles-based Northrop still expects to close the deal in the fourth quarter, despite the delay in getting approval by U.S. regulators. Shareholders of both companies are due to vote on the planned merger on Dec. 11.

European antitrust regulators have already approved the merger of two of the largest U.S. suppliers of satellites and sensors.

"The issue clearly is when it's going to be approved, not whether it's going to be approved," said Phil Finnegan, defense analyst with the Virginia-based Teal Group.

"It's moving ahead, clearly."

Robert Stevens, president and chief operating officer of Lockheed Martin Corp. , said his company had raised some concerns about maintaining access to sensors built by TRW, which Lockheed needs for the satellites it builds.

But he said he was confident those concerns could be addressed through legal measures short of halting the merger.

"We have a very specific level of interest in simply wanting access to payloads," Stevens told Reuters after an event with the Commission on the Future of the U.S. Aerospace Industry. "We don't think it's a problem that cannot be resolved."