Litton Industries to Buy Primark Unit

Litton Industries Inc. plans to buy Primark Corp.’s surveillance and information services unit for $432 million, reducing dependence on defense contracts and boosting its nonmilitary and commercial business.

Primark’s TASC unit provides information services to U.S. government agencies such as the CIA, as well as to nongovernmental agencies and commercial customers. Waltham, Mass.-based Primark, which will use the cash to repay debt, said it hired BT Alex. Brown to consider a stock buyback and sale of the firm while it focuses on its financial information business.

As the defense industry consolidates, Litton has become a smaller provider of information services to the military. The TASC acquisition is Litton’s attempt to build up that part of its business as its competitors do the same, analysts said.

“You have . . . to stay with your competition . . . so that’s what they’re doing,” said Paul Nisbet, an analyst at JSA Research Inc.

The purchase would broaden Woodland Hills-based Litton’s intelligence-related services, which include surveillance and reconnaissance, Litton said.

Litton said the acquisition would not affect earnings in its fiscal year ending in July. The acquisition should add about 10 cents to earnings in fiscal 1999, said Litton spokeswoman Kathleen Wailes.

Litton shares rose $1.81 to close at $52.75. Primark shares rose $2.94 to close at $38.69. Both trade on the New York Stock Exchange.

Litton said it isn’t planning any layoffs among TASC’s 2,600 employees, she said. TASC is based in Reading, Mass.

Also under the agreement, TASC will provide Primark with information technology research and development, planning and technical assistance for three years.

TASC would also continue to manage the Primark Telecommunications Network and supply information technology services to Primark units, Primark said.

Primark said it expects to use after-tax proceeds of about $345 million to reduce debt, including redemption of $112 million in 8.75% senior notes due Oct. 15, 2000. Primark said it may also buy back stock and make acquisitions in financial, economic and market research information fields.

The sale is expected to be completed by April 1.