The Justice Department gave its go-ahead yesterday to Lockheed Martin Corp.'s proposed $2.7 billion purchase of Comsat Corp., the satellite-services company that is a Bethesda neighbor of the giant defense contractor.
The approval, without any conditions, removes the last regulatory hurdle to Lockheed's plan to buy 49 percent of Comsat now, while waiting for Congress to pass a law that would allow it to buy the remaining 51 percent of the company. Lockheed decided to buy Comsat as part of a diversification plan aimed at broadening the aerospace firm's growing position in the commercial telecommunications business.
"We felt strongly there were no anti-competitive impacts as a result of this merger," said Comsat spokesman Jay Ziegler.
Comsat shares, which have fallen in recent days because of uncertainty over the deal, soared 26 percent on the news yesterday, closing at $34.75 on the New York Stock Exchange. Lockheed shares fell $1.62 1/2, to $33.37 1/2.
The Federal Communications Commission on Wednesday gave Lockheed the regulatory approval it needed to qualify to purchase the first 49 percent of Comsat. Current law forbids outsiders from owning more than 49 percent. Comsat, established by a 1962 act of Congress, is the U.S. agent in the Intelsat global satellite consortium.
Under its purchase proposal, Lockheed is buying the first 49 percent of the company for $45.50 a share and the assumption of $455 million in debt. That works out to about $1.7 billion. If allowed to buy the rest of Comsat, Lockheed would pay one of its shares for each share of Comsat still outstanding, at a cost of $1 billion.
While the Senate has approved legislation allowing Lockheed to proceed, the House has yet to act.