Merger activity has plunged in Amer-ica over the past few years, but the defence industry is still enjoying a round of couplings, helped by relatively strong share prices since last September's terrorist attacks. This week's agreed takeover of TRW, an aerospace and car-parts company, by Northrop Grumman accounts for about a quarter of the top ten deals announced so far this year, measured by value. The deal follows four months of dithering after TRW refused a first offer and before Northrop raised its price. There was a dramatic wave of defence-industry mergers in America in the 1990s, after the Pentagon gave warning that defence procurement would fall steeply (in the event, by more than half) thanks to cuts after the end of the cold war. The Clinton administration eased the pain of these mergers by helping to finance the job cuts that came with them (known as "pay-offs for lay-offs"). The fall-out from all this is behind today's wave of smaller mergers.
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