Atlantic Research Corp., the high-tech rocket maker that has been one of the Washington area's fastest-growing companies in recent years, yesterday gave up its year-long battle to stay independent and agreed to be taken over by Sequa Corp. for about $270 million, or $31 a share.

"It's a little like watching a baby grow up and then losing it," said ARC Chairman Coleman Raphael, who joined the firm in 1970. "On the other hand, it {the takeover} might be good for the company and it will be good for the shareholders."

The deal, which is expected to be completed by the end of the year, will result in Atlantic Research's operations and its employes being folded into a huge $1.2 billion-a-year New York conglomerate -- formerly Sun Chemical Co. -- whose diverse businesses range from military electronics and jet engine components to the operation of river barges and the manufacture of cigarette lighters for cars.

Sequa Chairman Norman E. Alexander issued a terse statement yesterday saying he was "pleased" by the agreement, but offered no details about Sequa's plans for ARC, which ranks as Washington's 27th-largest public company. However, ARC President William H. Borten said he had been "personally assured" by Alexander that Sequa "wants the {ARC} management team to remain intact and the operations of the company to continue as normal."

Borten said he had also received assurances that the "employes will be treated fairly" and that there are no layoffs to the offing. But Raphael, noting that layoffs of acquired companies are frequently the case in corporate takeovers, was not so sure. "I don't have confidence that won't happen in this case," he said.

The agreement comes only three weeks after ARC mounted a fierce defense against Sequa, filing a lawsuit accusing the New York firm of racketeering and securities law violations and beginning an all-out search for a "white knight."

But its defenses collapsed late last week when it was unable to find another firm to come to its rescue, largely because of uncertainties hanging over the financial markets ever since the Oct. 19 stock market collapse, Borten said.

Although ARC contacted more than 40 outside parties in the previous two weeks, none was able or willing to come up with the financing to top Sequa's original $30 a share tender offer.

"Basically, none of the parties proposed a transaction," said Borten. "Unquestionably, the financial alternatives are more limited since the Oct. 19 Black Monday than were available prior to that time."

Borten also noted that Sequa upped its offer slightly -- by $1, to $31 a share.

Under the terms announced yesterday, Sequa will extend its offer -- originally due to expire Tuesday -- until Dec. 21.

ARC's board, meanwhile, dropped its lawsuit and recommended that stockholders tender their shares to Sequa.

"I'm a realist," Borten said. "In the business world as it exists today, someone who has the resources to make an all-cash tender offer for a company can well succeed."

The Sequa takeover will mean the end of a company that has been one of the success stories of Washington business in recent years. Known as the country's leading producer of solid rocket motors for the Pentagon, Atlantic Research thrived on the Reagan administration's military buildup of the early 1980s. Between 1982 and 1986, its sales nearly doubled, from $133.1 million to $263.2 million, while profits soared from $6 million to $14.7 million.

To a large degree, many analysts say, ARC was a victim of its own success, growing so rapidly that it attracted increasing interest from others in the defense industry.

Last year, the firm first came under attack from the Connecticut-based Clabir Corp., which bought up 12.3 percent of its stock and then tried to force a merger. ARC strongly resisted and thought it had found a white knight two months ago when Sequa bought Clabir's stake.

But after the stock market fall, when ARC stock slipped below $20 a share, Sequa turned the tables and mounted its own attack, extending its $30 a share tender offer.

In the meantime, some analysts have suggested, other factors have come into play. The stock market crash increased pressures on federal lawmakers to bring the budget deficit under control, with military spending cited as a prime target.

As a result, the prospects for defense companies like ARC have been clouded, prompting growing talk about the needs for further industry consolidation.

"It might be that ARC will be better off in the future under the umbrella of Sequa than it would have been on its own," said Eliot Benson, an analyst with Washington securities firm of Ferris & Co.

On the other hand, said Benson, "I'm certainly sorry to see a good local company disappear from the ranks of publicly owned stocks in this area.