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Lockheed Scuttles Buyout of Titan
By Leon Worden
Signal City Editor
Sunday, June 27, 2004
ockheed-Martin Corp. retracted its $1.66 billion offer Saturday to purchase a San Diego-based information technology company that became embroiled in two international scandals since the buyout deal was struck.
Lockheed, the military's largest single information techology provider for the last nine years, sought to further advance its position by acquiring Titan Corp., a $2 billion government contractor with 12,000 employees including an estimated 8,800 who hold federal security clearances.
Lockheed offered more than $1.8 billion for the company on Sept. 15 and agreed to assume $530 million in debt. But Lockheed lowered the offer to $1.66 billion plus debt in February, when the Justice Department opened an investigation into allegations that Titan illegally bribed government officials in Saudi Arabia and Benin.
Lockheed and Titan agreed to a June 25 deadline for settling with the Justice Department, after which either party could scuttle the deal with no penalty.
In the interim, two translators Titan provided to the U.S. Army in Iraq were accused of wrongdoing at Abu Ghraib prison.
Friday's deadline for resolving the bribery allegations passed without a plea agreement, and Lockheed exercised its prerogative to back out Saturday.
Lockheed said it "declined Titan's request for a further extension."
Titan President Gene W. Ray said in a statement Saturday that although he was disappointed the acquisition didn't go through, it was Lockheed's idea, and he predicted continued success for Titan, which saw revenues climb by 26 percent in 2003.
"Titan is financially strong, and today has a backlog in excess of $5 billion in U.S. government contracts," he said. "We are proud of our entrepreneurial culture, which has made us a leader in many high technology areas of critical national importance."
None of the senior managers in charge of Titan's various business units jumped ship while the buyout was pending, he said.
"From Titan's point of view, all systems are go," he said.
Ray was planning to retire if the deal went through, but he told reporters earlier this month that he would stay if it didn't.
Titan shares were downgraded and prices fell in trading last week on the New York Stock Exchange as the deadline approached without a resolution.
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