(Changes dateline previous LOS ANGELES, adds byline, background, stock prices)
By Mark Weinraub
NEW YORK, Nov 27 (Reuters) - Defense contractor Northrop Grumman Corp. on Wednesday said it believes the Pentagon has recommended that the Justice Department approve the company's planned $6.6 billion purchase of military and auto parts maker TRW Inc.
The approval process has dragged on for months as regulators examine whether a combined Northrop and TRW would control the specialized radar systems and electronics that go on military satellites.
Northrop said discussions with the Defense Department had left it confident that the Pentagon had recommended the deal proceed.
But the Pentagon said it has not formally signed off on the acquisition. "We're still waiting for the Justice Department to resolve our concern regarding (an) important issue," Pentagon spokesman Glenn Flood said.
Northrop said the Pentagon's recommendation is contingent on the acceptance of a consent decree that calls for Northrop to maintain competition in the satellite technology industry. The draft of the decree does not require the merged company to sell off any businesses, it said.
"We are working with the Department of Justice to implement arrangements that ensure fair and open competition in space electronics," Northrop Chairman and Chief Executive Kent Kresa said.
Northrop's stock rose 55 cents to $98.75 in early trading on the New York Stock Exchange. Shares of TRW, which recently announced a $4.73 billion deal to sell its auto parts unit to Blackstone Group once the Northrop deal is approved, rose 63 cents to $52.90, also on the NYSE.
Northrop, the world's largest shipbuilder and the maker of the unmanned Global Hawk spy plane, said it told the Justice Department it plans to close the TRW deal on Dec. 11. The company had agreed not to close the deal without giving regulators at least 10 business days' notice before shareholders vote.
Sources close to the deal have said Deputy Defense Secretary Paul Wolfowitz was briefed on the merger review last week and gave the deal a basic "thumbs up" if agreement could be reached on the issue of competition in the military space market.
Shareholders of both companies are scheduled to vote on the deal on Dec. 11.
The European Union antitrust authority has already approved the deal, which would create a company that would vie closely with Boeing Co. for the spot as the No. 2 U.S. defense contractor behind industry leader Lockheed Martin Corp. .