
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, March 10, 1994                   TAG: 9403100187
SECTION: BUSINESS                    PAGE: B-8   EDITION: METRO 
SOURCE: New York Daily News
DATELINE: NEW YORK                                LENGTH: Medium

INSIDER-TRADING PROBES BEGUN IN GRUMMAN MERGER

The Securities and Exchange Commission is investigating whether investors bought Grumman Corp. stock and options last week using insider information about the pending acquisition by Martin Marietta, a top Grumman official has confirmed.

The deal was announced Monday. Martin Marietta is offering $55 per share for all of Bethpage, N.Y.-based Grumman's 34 million outstanding shares in a deal valued at $1.9 billion.

After the announcement, Grumman stock skyrocketed $14.25 a share, closing at $54.121/2. Tuesday, the stock was up 12 cents, closing at $54.25, and Wednesday it rose another 75 cents to $55 with more than 1.2 million shares traded.

But investigators are interested in purchases of Grumman stock last week, before the deal was made public. Those investors stand to make millions.

``The SEC is investigating and we will cooperate fully,'' said Robert Harwood, Grumman's vice president of investor relations. ``All the information about this deal was kept tight and quiet. I just can't imagine that information was leaked out.''

The SEC declined to comment on whether Grumman was being investigated. Grumman in late 1992 closed its fire-engine factory in Roanoke.

Previously, Grumman stock held little interest to most investors, because the company was perceived as another defense-contractor casualty of the post Cold War economy.

But Friday, the stock closed up more than $3 a share on the New York Stock Exchange, with the volume of shares traded jumping from 67,300 on Thursday to 293,100.

Then last week, investors began buying up Grumman stock options on the Chicago Board Options Exchange. Friday, investors gobbled up Grumman shares on the New York Stock Exchange, pushing the price up 8.5 percent, from $36.75 to $39.875 per share.

``You're telling me somebody didn't know something on this beforehand?'' asked Sharon Kalin, an arbitrager with Athene-Coronoda Management.

Also, trading activity in Grumman call options, which give investors the right to buy the company's stock at a set price by a specific date, soared last week, leading many people to conclude that information about the takeover was known before it was made public. Chicago Board Options Exchange officials confirmed that the exchange is investigating suspicious trading activity in Grumman options.

by CNB