Titan board takes L-3 offer

L-3 Communications has agreed to acquire Titan in a cash transaction valued at $2.65 billion.

L-3 focuses on intelligence, surveillance and reconnaissance (ISR) systems and secure communications, among other areas. The company’s revenue in fiscal 2004 was $6.9 billion. Titan, based in San Diego, finished 2004 with $2.05 billion in revenue. The integrator focuses on ISR, too, and also pursues command and control systems.

The deal is subject to Titan shareholder approval, regulatory review and the settlement of litigation. L-3's offer didn't impress Wall Street, as shares of Titan fell slightly to $22.47 in today's trading.

To pave the way for the deal, Titan agreed to settle "securities law class actions and derivative suits," according to the company. Those actions are pending in federal and state courts in California and the Delaware Court of Chancery. Titan expects the transaction to close before the end of this year and possibly by the end of September.

Titan represents the latest in a series of L-3 acquisitions, which date to the company’s founding in 1997. The company formed through the acquisition of electronics businesses associated with the 1996 Lockheed Martin/Loral Corp. merger. Frank Lanza, L-3’s chairman and chief executive officer, was president and chief operating officer of Loral and later executive vice president at Lockheed Martin.

A spokesman for L-3 said the company’s acquisitions historically have operated as stand-alone business units within the corporate umbrella.

Last year, Lockheed Martin agreed to buy Titan, but the deal collapsed in the wake of a federal probe into bribery allegations involving Titan officials.