L-3 Communications, the U.S. defense group, has clinched a deal to acquire Titan Corporation for $2.65 billion in cash and debt, expanding its range of products in military technology.
Details of the transaction are expected to be announced later on Friday, but L-3 is paying $23.10 per share in cash to Titan shareholders, in addition to assuming the company's debt. On Thursday, Titan shares closed at $22.79.
The agreed takeover was sealed after several weeks of intense negotiations. By purchasing Titan, L-3 would expand its portfolio of technologies for homeland security — a market that is expected to withstand any cuts in military spending.
Titan, which is based in San Diego, is also attractive because nearly half of its 12,000 employees have top secret US government security clearances.
L-3 expects the deal to add some 25 cents of diluted earnings per share to its full-year results for 2006.
The deal comes almost a year after the company's previous agreement to be bought by Lockheed-Martin was terminated because of a federal investigation into a case of foreign bribery. Titan settled the charges in March, allowing it to seek another buyer.
L-3, which produces surveillance and communications intelligence systems as well as collision avoidance systems and cockpit voice recorders for military and commercial aircraft, has grown spectacularly since former Loral president Frank Lanza founded the group in 1997.
Although L-3 has expanded aggressively through acquisitions, Mr. Lanza is known in the defense industry for not overpaying for assets.
L-3 obtained a $2 billion financing package to fund the purchase of Titan.
The deal follows L-3's interest in buying United Defense Industries, which this year agreed to be bought by BAE Systems, the UK defense group, for $4 billion.
