TRW, which has aerospace technology as well as automotive operations, called the bid "inadequate" and called a meeting of shareholders April 22 to vote on the proposal, and unveiled other actions in an effort to outflank its rival.

The Cleveland, Ohio, company, which is coveted for its sophisticated laser technology being developed for missile defense, said it planned to boost value for shareholders by spinning off its auto parts business and by accelerating debt reduction.

TRW said it could also get other, more lucrative offers.

Since the February 22 bid by Northrop, TRW and its advisers "have received unsolicited indications of interest from third parties" for its automotive business, the company said.

"In addition, the company has received unsolicited indications of interest from third parties with respect to each of its operating businesses as well as a private equity investment in the entire company."

TRW's board said it had unanimously determined that the 47-dollar-a-share formal bid of March 4 "is financially inadequate and not in the best interests of TRW's shareholders," the firm said.

Northrop Grumman, after being rebuffed by the TRW board on March 3, opened its offer directly to the TRW shareholders hours later.

"As we indicated when we rejected Northrop Grumman's earlier proposal, this is all about shareholder value," TRW chairman Philip Odeen said in a statement.

TRW said it was targetting an extra 1.6 to 2.0 billion dollars in debt reduction in 2002, after reducing net debt by almost one billion dollars in 2001.

The board said considered that the Northrop Grumman offer "grossly undervalues" TRW's businesses and opportunities.

The offer price was below the current market price of TRW's common stock, TRW said.

On Wednesday, TRW shares gained 89 cents to 51.17 dollars, while Northrop shares rose 43 cents to 109.90. Northrop Grumman had made its offer when TRW's stock price was temporarily depressed following the unexpected resignation of former TRW chairman, president and chief executive David Cote, Odeen said.

"Northrop Grumman's offer is clearly an opportunistic attempt to acquire TRW's premier franchise," he said.

"In particular, the current planned increases in government defense spending are expected to benefit many technologies and arenas where TRW's space, electronics and systems businesses are a leader."

Analysts said TRW may be trying to spark a bidding war by revealing the new expressions of interest by third parties, but others are more intrigued by the potential that a separation of the automotive and aerospace divisions would prove lucrative.

JP Morgan industrial sector analyst David Bradley said he views the strategy change as "modestly positive," but also the announcement could be a ploy to induce Northrop Grumman to raise its bid.

"We view TRW's strategic plan to break the company into its component pieces as good news, primarily because the company apparently will not pursue what we viewed as a worst-case scenario, a 'just say no' defense to Northrop Grumman's bid that is possible under Ohio Law," Bradley said.

But the analyst said he is skeptical that TRW would break itself up, which could prove both time-consuming and difficult from a tax standpoint.

"We think TRW's actions may encourage Northrop to make a higher bid, and may also encourage other potential bidders to enter the fray," he said.

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