takeout by Lockheed at 22
Lockheed Martin to Buy Titan for $1.8B
By ELLIOT SPAGAT
.c The Associated Press
SAN DIEGO (AP) - Lockheed Martin Corp. became the latest defense contractor to bolster its information-technology offerings for the federal government with a $1.8 billion cash and stock deal for Titan Corp.
Titan has enjoyed sharp growth recently as federal defense and security agencies have increasingly called on the company's services since the 2001 terror attacks and the frenzied effort to improve the nation's security.
Under terms of the deal announced late Monday - which also includes the assumption of $580 million debt - Lockheed would pay $22 per share in cash or stock for each Titan share. That represents a 30 percent premium to Titan's closing price Monday of $16.96 on the New York Stock Exchange.
The boards of both companies have approved the transaction, which is expected to be completed during the first quarter of 2004, subject to regulatory approvals.
San Diego-based Titan was founded in 1981 and develops information networks, intelligence and surveillance systems for the Pentagon and other government agencies. In 2002, the federal government accounted for 95 percent of Titan's revenue.
Lockheed, which is based in Bethesda, Md., said the Titan acquisition would help strengthen its relationship with federal agencies.
Titan has recently been the subject of takeover speculation as large defense contractors have acquired information-technology companies. For example, General Dynamics agreed to acquire Veridian Corp. for $1.23 billion in June, adding a company with more than $1 billion in annual revenues to its portfolio.
Since late 2001, Titan has left many commercial businesses. It began pursuing commercial customers in the late 1980s as defense budgets eroded but those businesses have weighed heavily on profits in recent years. Last year's loss resulted largely from a $218.1 million pretax hit from discontinued operations, including telecommunications holdings.
Titan took its SureBeam food-irradiation unit public in 2001 and spun off the rest of its investment to Titan shareholders earlier this year.
In the last 18 months, Titan has won 13 contracts valued at more than $100 million. Just last week, Titan won a $252 million contract from the Air Force for information warfare engineering services, the latest in a string of big projects have fueled a sharp rally in its shares this year. Titan's shares have more than doubled since May.
Titan, which employs 11,000 people, posted a loss of $271.5 million, or $3.57 a share, on revenue of $1.39 billion last year. Company officials told investors last week that 2003 revenue would fall between $1.73 billion and $1.78 billion. It said its backlog of orders - a key indicator of future revenue - totaled $4.65 billion, up from $4.04 billion at the end of last year. |
