Lockheed Martin Agrees to Acquire Titan for $1.8 Billion
Lockheed Martin Corp., seeking to beef up its presence in military electronics and government computer systems, said Monday that it had agreed to buy San Diego-based Titan Corp. for $1.8 billion in cash and stock.
Titan, with about 11,000 employees, develops and services sophisticated electronics and computer-based information systems used by the Defense Department, the Department of Homeland Security and other government agencies. The company’s revenue last year was $1.4 billion.
The offer by Lockheed Martin, the largest U.S. defense contractor, follows acquisitions by Lockheed and other major weapons makers to broaden their product lineups, especially in the areas of intelligence and surveillance.
“It gives us what we call additional points of presence within intelligence agencies, the Defense Department and other agencies of the government,” said Tom Jurkowsky, a spokesman for Bethesda, Md.-based Lockheed Martin.
Jurkowsky said it was “far too premature” to say whether there would be job cuts at Titan. “We’re obviously going to look for efficiencies,” he said. “But we’re here to grow. We believe we can provide excellent long-term career opportunities for those employees who stay with us.”
Under the deal, which was approved by both companies’ boards of directors, Lockheed would pay $22 in cash and stock for each of Titan’s shares, nearly a 30% premium over Titan’s closing stock price Monday.
Titan closed at $16.96 a share, down 12 cents on Monday, before the deal was announced. Lockheed Martin’s stock fell 14 cents to $50.97 a share. Both trade on the New York Stock Exchange.
Titan shareholders may elect to receive the $22 per share in cash, an equivalent amount of Lockheed common stock or a combination, the firms said. Investors who elect to receive all cash or stock will be subject to proration, so that the total deal will be equally divided between cash and stock, they said.
Titan’s stock has climbed 63% this year, as other small and mid-size providers of defense electronics and information technology services have been gobbled up by larger defense companies.
Last month, Lockheed agreed to pay about $550 million to buy most of the federal computer-outsourcing unit of Dallas-based Affiliated Computer Services Inc. And General Dynamics Corp. recently paid $1.2 billion for Veridian Corp., based in Arlington, Va.
Titan Chairman and Chief Executive Gene W. Ray said in a statement that Lockheed Martin “is acquiring Titan to expand and grow the business. Together we will offer a broader spectrum of system and IT [information technology] solutions to our customers.”
Founded in 1981, Titan for a time also branched out into commercial markets, such as food-irradiation technology and wireless communications. But in recent years it has largely sold, closed or spun off those divisions and focused on military and government programs.
Titan sold part of its SureBeam Corp. food-irradiation subsidiary -- also based in San Diego -- in 2001 through an initial stock offering, and it spun off the remainder to Titan’s stockholders earlier this year.
As part of its renewed focus on defense contracting, last year Titan bought privately held Jaycor Inc., a maker of radar and communications systems.
The Justice Department and the Pentagon must OK the deal.
