Renewed Takeover Rumors Give Lockheed Stock Boost

The price of Lockheed shares rose $1.75 Friday on the New York Stock Exchange on renewed rumors that aerospace giant Boeing Co. may try to buy its Calabasas-based defense contracting rival.

Lockheed closed at $49.50 on volume of about 757,100 shares--compared to Thursday’s 234,900--after Business Week magazine’s “Inside Wall Street” stock-tip column quoted unidentified sources as saying that Boeing, based in Seattle, is keenly interested in Lockheed’s defense contracting business.

Reports that Boeing is interested in Lockheed are not new. The company has been the subject of periodic takeover rumors in recent years, and analysts said they do not give much credence to the new report. They noted that Wall Street’s reaction also indicated skepticism in that the stock did not advance to its 52-week high of $50.125.

“I would sell Lockheed stock while it’s up,” said Paul H. Nisbet, an analyst with Prudential-Bache Securities in New York. Lockheed is not likely to agree to a takeover, he said, “and I can’t imagine Boeing going after Lockheed or anyone else on a hostile basis.”

Nisbet explained that hostile takeovers among defense contractors are extremely rare--in part because the Pentagon would vigorously protest any action that might disrupt the business of one of its prime suppliers.