Lockheed's $1.2-billion bid for Sanders Associates overcame a potential hurdle Monday when Loral Corp. announced that it was "discontinuing" its offer for Sanders.
Loral had made a hostile $50-per-share offer for Sanders before Lockheed topped the East Coast electronics firm last Wednesday with a $60-per-share bid.
Bernard L. Schwartz, chairman of Loral, said that his firm had received the "unqualified support" of its shareholders and bankers but that Loral's interests would be best served by dropping the offer.
Sanders shares dropped $2.62 1/2 on Monday to close at $59.62 1/2 in trading on the New York Stock Exchange. The shares had risen above the Lockheed offer on speculation by arbitrageurs that a higher bid would be made for Sanders.
With the Loral offer out of the way, Lockheed appears to have a solid and defensible grip on Sanders. Under its acquisition agreement, Lockheed has options to obtain a controlling share of Loral stock at $60 per share.
Sanders produces electronic warfare equipment such as radar jammers, which will give Lockheed a new capability in electronics that it has sought.
Meanwhile, Lockheed disclosed Monday in offering documents that it will finance the Sanders acquisition partly through existing lines of bank credit and partly through a new $850-million credit line from a banking syndicate led by Bankers Trust. An existing $350-million credit line is led by Bank of America.
The offering documents also indicated that Sanders Chairman Jack L. Bowers will be elected to the Lockheed board. Lockheed will pay First Boston Corp., its investment banker in the deal, a $4-million fee.