Lockheed to buy federal vendor Titan

Lockheed Martin Corp. has announced a $2.4 billion agreement to acquire Titan Corp.'a San Diego company that sells defense and intelligence services almost exclusively to the federal government.

'Titan provides additional presence within the U.S. government customer base and expands our competencies,' said Vance Coffman, chairman and CEO of Lockheed Martin. 'Titan's outstanding record of sales growth and the quality of its work force made this transaction very attractive to us.'

For the first six months of 2003, Titan reported sales of about $815 million, 24 percent higher than the same period last year. Titan's customers include the Defense and Homeland Security departments, several intelligence agencies and a handful of civilian agencies.

Titan's chief business lines are command, control, communications, computers, intelligence, surveillance and reconnaissance; enterprise IT; and homeland security.

The company ranked 15th on the 2003 Washington Technology Top 100 list of federal prime contractors; Lockheed Martin was the top-ranked contractor for the ninth straight year.

Lockheed is paying more for Titan than General Dynamics Corp. did when acquiring Veridian Corp. of Arlington, Va., earlier this year for $1.5 billion. The higher price makes sense, said Anita Antenucci, managing director of Houlihan Lokey Howard & Zukin, an investment bank in Fairfax, Va.

There are relatively few acquisition targets of this size in the government marketplace, especially ones offering benefits such as a work force that includes a large number of employees with security clearances, Anetnucci said.

Lockheed Martin reported 2002 revenue of $26.6 billion and employs 125,000 people worldwide. Titan, with 2002 revenue of about $1.4 billion, has roughly 11,000 employees in 41 states and 12 countries.

The acquisition has been approved by the boards of directors of both companies and is expected to close early next year.

Patience Wait writes for Washington Technology magazine.

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