NEW YORK (CNN/Money) - The board of TRW Inc. formally rejected a hostile takeover bid from Northrop Grumman Corp. Wednesday, calling it financially inadequate, but said it would look at other moves including splitting its automotive business into a separate company in a bid to cut debt and raise its share price.

The rejection is not a surprise given that TRW's stock price now is above the price Northrop is offering. TRW also had rejected Northrop's previous unsolicited $5.9 billion bid for the company, saying it wanted time to evaluate the offer. That move prompted Northrop to take the offer directly to TRW shareholders, turning its efforts into a hostile bid.

The Northrop bid is worth $47 for each TRW (TRW: up $0.77 to $51.05, Research, Estimates) share. TRW stock was at $39.80 before the offer, but surged $10.50, or nearly 30 percent, the day the offer was announced. TRW stock climbed 97 cents to $51.25 in before-hours trading on Instinet Wednesday, following a gain of 14 cents in Tuesday's trading. Shares of Northrop (NOC: up $2.33 to $111.80, Research, Estimates) gained $1.01 to $109.47 in Tuesday trading.

TRW also said Wednesday it is recommending that shareholders reject a "mini-tender" offer for 3.4 percent of the company by Toronto-based TRC Capital Corp. for $50 a share. It pointed out that the offer also is below current market prices and that it includes conditions.

Officials of TRC, which regularly makes unsolicited bids for minority stakes in companies, could not be reached for comment Wednesday, while a spokesman for Northrop said the company did not yet have a comment on TRW's statement.

The TRW statement Wednesday said it believes it can lift share price without a sale. Specifically, it said it is looking into the possible spinoff of TRW's automotive business as an independent, publicly traded company. It said it also is looking at reducing its debt by $1.6 billion to $2 billion by the end of the year.

TRW's statement said the Northrop bid was considered too low by its two financial advisers, Goldman Sachs & Co. and Credit Suisse First Boston. It pointed out the Northrop offer includes a number of conditions, including a collar price that could result in a lower price paid than the $47 offer.

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"Northrop Grumman's offer is clearly an opportunistic attempt to acquire TRW's premier franchise," TRW Chairman Philip Odeen 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. Additionally, we believe that our automotive and commercial aerospace businesses will benefit from positive economic trends in these sectors."

Northrop reportedly had eyed a sale or spinoff of TRW's auto unit if it succeeded in its bid. TRW's statement said it had weighed a spinoff of its automotive parts unit for some time.

"We believe that our strategic plan announced today will create two 'pure play' independent businesses, each positioned to deliver superior growth and returns," Odeen said.