CCT Calls Off Talks to Buy Firm After Zeta Deal Falls Through

Computer & Communications Technology, which last week rescinded its $39-million sale of Zeta Laboratories to Whittaker Corp. because of apparent government contract “irregularities,” on Wednesday called off negotiations to purchase Action Computer Technology.

Negotiations for Action, a privately held magnetic disk and tape manufacturer in Goleta, were dropped because of “valuation problems caused by our stock’s decline” and the need to concentrate on “getting the (Zeta) situation corrected,” according to CCT Chairman E. T. Bahre.

CCT’s stock tumbled from a high of about 10 before the Zeta sale was rescinded to 5 on Wednesday, Bahre said.

That stock drop was generated by CCT’s announcement on June 30 that it would repay Whittaker $33.6 million it received in March for the sale of an 86% interest in Santa Clara-based Zeta. CCT also agreed to pay an additional $4.5 million for shares Whittaker had purchased from other shareholders.

That agreement stemmed from the announcement that Whittaker had uncovered what Bahre identified as “apparent irregularities in the cost data used by Zeta regarding certain U.S. government-related business.”

Bahre said it was too early to determine when an internal investigation would be completed.

“We’ve got no idea yet on the timing, but we hope to wrap it up as rapidly as possible,” said Bahre, adding that the company would report its findings to the Department of Defense.

In a related move, Edwin K. Chapman was named president of Zeta. Chapman, who served as president of Zeta for an “interim period” before the rescission, earlier had been a senior vice president of Litton Applied Technology.