NEW YORK (CNN/Money) - Goodrich Corp. has agreed to buy TRW Inc.'s aeronautical systems business for $1.5 billion, a deal that will likely do little to undercut efforts by other companies to buy TRW.

Charlotte, N.C.-based Goodrich said the acquisition, expected to close in the fourth quarter, will add to its 2003 earnings per share, excluding special items, and would bring annual cost savings of between $30 million and $40 million within the first three years of closing.

"This is a strategically important acquisition for us as we continue to add value by building on our core aerospace base," Goodrich Chairman and CEO David Burner said.

Cleveland-based TRW said it would treat the unit as a discontinued operation. The deal will cut TRW's second-quarter earnings by 10 cents a share, to between 98 cents and $1 per share. Wall Street analysts surveyed by earnings tracker First Call expect TRW to earn 99 cents a share in the quarter.

Following the announcement, credit rating agency Standard & Poor's put Goodrich on credit watch with negative implications.

"Although the proposed transaction would strengthen Goodrich's competitive position in selected commercial aerospace businesses, the additional debt would weaken the firm's financial profile," S&P credit analyst Roman Szuper said in a statement.

In a separate announcement, Szuper said TRW remained on credit watch and that its rating, BBB, or one step above junk status, could be changed up or down, depending on the company that eventually buys it. Goodrich has a BBB+ rating.

TRW (TRW: Research, Estimates) shares jumped 27 cents to close at $55.97 Wednesday. Goodrich (GR: Research, Estimates) shares fell 33 cents to close at $28.98.

TRW's Aeronautical Systems, based in Solihull, England, had 2001 revenue of $1.1 billion and earnings before interest, tax, depreciation and amortization before special items of $180 million.

TRW said proceeds of the sale will be used to accelerate its debt reduction and pave the way for the separation of its automotive business.

Related links       TRW Goodrich Northrop Grumman

Northrop Grumman (NOC: Research, Estimates) launched a $6.7 billion hostile bid for TRW earlier in the year, and has said it is especially interested in the company's missile-defense and military space operations. It has been studying TRW's books to see if it wants to raise its offer for TRW, a process that is moving toward completion, according to TRW CEO Philip Odeen.

TRW said other companies were studying its books, though it would not disclose their names.

BAE, looking to expand in North America, said last week it was considering making a rival offer. Analysts said any bid would have to be valued at more than $7.0 billion.

The sale of TRW's aeronautical business is unlikely to diminish BAE's possible interest in TRW's defense operations.

"We were clear in our announcement last week in which direction our interest lay," BAE spokesman Phil Soucy said.

Northrop Grumman representatives could not be reached for comment.

-- From staff and wire reports.