Car components, defence and aeronautical group TRW has failed to beat off buyout bids from its American rival Northrop Grumman Corporation.

Potential buyer BAE Systems was put out of the running after it admitted it was not interested in TRW's automotive division whose UK operations are based in Solihull. This left the field clear for Northrop to seal a $7.8bn (£5.12bn) deal, creating one of the world's biggest military systems contractors.

Both TRW and Northrop shares slipped on the New York Exchange after the announcement, which ends four months of defensive footwork by the former and predatory moves by the latter. TRW had earlier dismissed Northrop bids as derisory. The buyout is expected to be given the green light by US regulators within the next six weeks.

“The outlook for this company is very bright indeed,” says Northrop's CEO Kent Kresa, who adds that significant growth can be expected in space and missile defence projects and what he describes as “homeland security”.