Litton Shares Up Sharply on Takeover Talk

Litton Industries shares were bid up sharply Thursday amid what financial analysts termed “hot and heavy” speculation that the Beverly Hills-based conglomerate is the target of a takeover by either General Electric or Schlumberger.

Litton stock closed at $78.75, a gain of $6.625, on heavy volume of 718,800 shares. The stock gained $1.50 in Wednesday’s trading.

Analysts said Litton further fueled speculation when it appeared to change its public statement over the rumors.

A Litton spokesman at first was quoted by Dow Jones as saying that the firm knew of no reason for the sharp rise in its stock. But later Thursday, a Litton spokesman said the company would simply not comment on its stock-price movements as a matter of policy.

Under new pressure from the Securities and Exchange Commission, companies may no longer deny knowledge of a takeover situation when they know it to be true.

Litton Chairman Fred O’Green is rumored to be in the Soviet Union on business, which seemed to indicate that Litton is not involved in any friendly takeover discussions. A Litton spokesman said he did not know O’Green’s whereabouts.

Laurence Lytton, a financial analyst at Drexel Burnham Lambert, evaluated the takeover rumors as having less than a 50/50 probability of being true.

The GE rumors are more credible, Lytton said, because both Litton and and GE are in the defense electronics and factory automation markets. But he does not believe that the two would fit well together. He also is skeptical about the talk involving Schlumberger, a giant in the oil-field services industry--with interests in electronics--whose parent company is based in the Netherlands.

“Everybody knows Schlumberger wants to buy a seismic company, and everybody knows that Litton’s Western Geophysical is the best in the business,” Lytton said. “But Schlumberger could have a problem being a foreign company buying a major defense contractor. You don’t want to shake up the Pentagon if you can avoid it.”