After fighting for more than a year to retain its independence, Atlantic Research Corp. confirmed yesterday that it is "engaged in negotiations" with Sequa Corp. about a possible merger at $31 a share.

The Alexandria-based defense contractor said there were "no assurances as to the timing or price" of any transaction or even that there would be an agreement to merge. Nevertheless, industry analysts widely viewed the announcement as a sign that ARC's defensive tactics had failed and that it was left with little choice but to accept a deal with Sequa.

"It would appear that Atlantic Research was searching for a white knight, but they didn't find too many interested parties," said Byron Callan, an industry analyst with Prudential Bache in New York.

Analysts also speculated that a reasonably large number of ARC stockholders had tendered their stock to Sequa in response to the company's original offer last month at $30 a share, thereby forcing ARC's hand. The tender offer expires Tuesday.

Sequa, formerly called Sun Chemical Corp., is a $1.2 billion conglomerate with diverse interests that include gas turbines, jet engines, military electronics, specialty chemicals, and women's apparel. ARC, one of the country's largest manufactureres of solid propellant rockets for Pentagon missile systems, had $263.3 million in revenue last year.

The surprise announcement yesterday comes two weeks after ARC bitterly rejected Sequa's overture, filing a suit accusing it of violating securities and racketeering laws by misleading ARC president William Borten about its intentions.