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Titan Shares Slip on Probe Concerns

March 09, 2004|From Bloomberg News

Shares of Titan Corp., the maker of military-communications systems that Lockheed Martin Corp. last year agreed to buy, fell as much as 11% on Monday on concern a federal criminal probe of Titan may delay or derail the purchase.

The Justice Department is investigating whether Titan consultants made unlawful payments to foreign officials, Lockheed said late Friday. Titan later confirmed the probe. Lockheed also is reviewing whether those payments were accurately reflected on Titan's books.

Titan shareholders are scheduled to vote March 16 on the $1.8-billion purchase by Lockheed. Reviews by both companies and probes by the Justice Department and Securities and Exchange Commission may not be finished by then, leaving Lockheed to decide whether purchase-agreement conditions were met.

Shares of San Diego-based Titan dropped $1.82 to $19.11 on the New York Stock Exchange, after earlier declining to $18.55. Lockheed, based in Bethesda, Md., rose 16 cents to $45.21.

Lockheed, maker of F-16 fighter jets and C-130J cargo planes, had agreed in September to buy Titan for $22 a share in cash and stock to expand its technology-services business.

Including the assumption of debt, the total value of the transaction is about $2.4 billion. Titan had $1.8 billion of 2003 sales, while Lockheed had $31.8 billion of sales.

"We're working to complete the merger agreement on schedule and there are no discussions" on reducing the price, Titan spokesman Wil Williams said.

If the transaction is not completed by March 31, Lockheed or Titan may terminate the agreement. Lockheed spokesman Jeff Adams declined to comment.

If there was a violation, the government could impose fines, penalties or criminal sanctions or limit Titan's exports or future business with U.S. government agencies, Lockheed said.

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