Bidding Battle Erupts for LTV Defense Units

A bidding war broke out Monday for LTV Corp.’s missile and aircraft divisions when Loral Corp. threw in a late-day bid after LTV announced it had a deal with Martin Marietta Corp. worth $440 million.

LTV said it would stick by its agreement with Martin Marietta, even though Loral said it was offering $28 million more in cash.

The Martin Marietta bid accepted by the struggling conglomerate--which last month marked its sixth anniversary in bankruptcy court--topped an earlier bid by Loral Corp. for the missile division only.

Late in the day, Loral teamed up with the Carlyle Group, a Washington-based investment firm, to make its counteroffer of $424 million in cash and $21 million in preferred stock in Loral.

Loral said in a statement that it was “confident that the judicial process will allow the acceptance of this higher bid with a greater cash component.”

After receiving the Loral counteroffer, LTV spokesman Jerry Dalton in Dallas said, “We have an agreement with Martin Marietta. We will take it to the bankruptcy court and suggest this is the best offer we have. The court has the final say.”

Dalton said LTV had reviewed several proposals last Friday, including the one from Loral for the missile division. The agreement with Martin Marietta was in LTV’s best interest, he said. “Price alone does not make the best bid.”

Martin Marietta officials weren’t immediately available to comment on the Loral counteroffer, but earlier in the day the company had said it felt confident about its bid.

“We’ve been pursuing this business for nearly a year now and feel it’s a strategic match with our existing defense and commercial businesses,” said Charles P. Manor, a Martin Marietta spokesman.

Martin Marietta, based in Bethesda, Md., is involved in space, defense, electronics, information management, energy and materials design and manufacture.

LTV is a large steel and aerospace industrial concern.

The tentative agreement calls for Martin Marietta to pay $396 million in cash and $44 million in preferred stock for the two divisions. Manor said the money would be raised through lines of credit.

The bidding between Martin Marietta and Loral is the latest in a series of offers for pieces of LTV.

Earlier this year, Martin Marietta teamed with Lockheed Corp. of Calabasas to bid $385 million for the two divisions, which they planned to run as a joint venture.

But then came a competing $450-million offer from Thomson-CSF, a giant French defense company, and the Carlyle Group.

“We felt it was fruitless back in the spring to engage in a bidding war with a foreign government,” Manor said. Thomson withdrew when congressional opposition knocked it out of contention.

After the Thomson bid fell through, LTV entertained an offer from Loral for a maximum of $240 million for its missile division and an offer of $190 million from the Carlyle Group and Northrop Corp. for the aircraft division, said Julian Scheer, an LTV spokesman.

Martin Marietta was “aware of a competing bid and they came in with this proposal” last Wednesday, Scheer said.

The performance of the divisions has made them financially more attractive. The two divisions had $1.7 billion in sales last year, $68 million in earnings and a $3.7-billion backlog in contracts, LTV said. The two divisions have 13,000 employees.