[MORE IRAQ / ABU GHRAIB][THE-SIGNAL.COM][S.C.V. HISTORY IN PICTURES]
Lockheed's Takeover of Titan May Be Off
By Leon Worden
Signal City Editor
Saturday, June 26, 2004
ockheed Martin Corp. appeared unlikely Friday to go through with its planned acquisition of Titan Corp., a San Diego-based information technology company that provides translators to the U.S. military.ockheed Martin Corp. appeared unlikely Friday to go through with its planned acquisition of Titan Corp., a San Diego-based information technology company that provides translators to the U.S. military.
But if Lockheed backs out of the $1.66 billion deal, it will have nothing directly to do with the fact that two Titan translators are implicated in the Abu Ghraib prisoner abuse scandal.
Rather, the deal would be squelched by Titan's failure to meet a Friday deadline for a settlement with the Justice Department over allegations of bribing government officials in Saudi Arabia and Benin.
Titan "has been informed by Lockheed Martin Corp. that it is unwilling to extend the June 25, 2004, date by which Titan must secure a definitive plea agreement relating to alleged violations of the Foreign Corrupt Practices Act," Titan said in a statement released after the close of trading Thursday.
Titan said Lockheed has not directly informed it that it will squelch the deal.
Lockheed shaved about $200 million off its original offer when the Justice Department launched its investigation. The Securities and Exchange Commission subsequently informed Titan it plans to file civil charges.
Lockheed spokesman Jeff Adams, reached about an hour before Friday's expiration, said the merger agreement "right now is still in effect" and wouldn't speculate on what might happen afterward.
Titan shares closed in Friday trading at $14.53, down $3.71 on the day. Lockheed shares were off 14 cents at $51.97.
As the military increasingly turns to the private sector for core functions, Titan has grown rapidly into a $2 billion corporation. The fact that roughly two-thirds of its 12,000 employees hold government security clearances makes it an attractive acquisition target, analysts say.
Adams called Titan a "great strategic fit" for Lockheed as the latter places ever-greater emphasis on its role as an information technology provider to the military and other government agencies.
"A lot of people notice rockets and airplanes, and while those are still core businesses of ours, we're trying to highlight our information technology (services)," Adams said. "It is the fastest growing sector of our operations."
Adams said Lockheed-Martin has been "the largest provider of information technology services to the federal government for nine years in a row," with IT contracts worth over $8 billion in 2003 alone.
Lockheed provides "more engineers to the government than Microsoft," Adams said.
Titan currently has more than 4,400 translators working in Iraq under a five-year contract valued at $402 million, according to House testimony earlier this month from William Reed, director of the Defense Contract Audit Agency.
Titan doesn't publicize figures, but the 4,400 translators include an unknown number of indigenous Iraqi citizens.
Titan fired one of its translators, a 50-year-old Egyptian-American from Maryland, after an Army general identified him as a suspect in the prisoner abuse scandal at Abu Ghraib.
A second translator provided to the Army by Titan, a 48-year-old Iraqi-American from Canyon Country who works for a Titan subcontractor, was one of four men identified as having been "either directly or indirectly responsible for the abuse."
A racketeering lawsuit filed June 9 on behalf of several former Iraqi detainees accuses Titan of conspiring with another intelligence firm to gain a competitive edge by torturing prisoners. A Titan spokesman termed the lawsuit "frivolous."