US defence giant Northrop Grumman has raised its bid for the defence manufacturer TRW to $6.7bn (£4.66bn) in shares.

The bid was put forward just a week ahead of a meeting where shareholders will discuss its takeover attempt.

A successful takeover would challenge Boeing's position as the second largest US defence contractor.

The combined defence and aerospace business resulting from the takeover would have a combined turnover of about $27bn.

Changing market

Northrop raised its bid because TRW had become a more valuable company in light of recent changes to the market place, Northrop said.

"We are increasing our offer for TRW due to improving economic conditions which drive TRW's end markets and continuing positive developments in the defence industry," Northrop chairman and chief executive Kent Kresa said.

TRW is keen to fend off the Northrop bid and has put its car parts business up for sale in a bid to do so.

Northrop's previous bid worth $5.9bn had been rejected by the TRW board after it was announced on 22 February.

TRW's board urged shareholders to stay put until it had studied the latest offer more closely.