Lockheed Martin Corp. declined to extend today's deadline for Titan Corp. to resolve a federal bribery investigation but stopped short last night of declaring its $2.2 billion deal to buy the San Diego contracting company dead.
Titan said yesterday it would not meet the deadline stated in the merger agreement to reach a plea deal with the Justice Department, which is investigating whether Titan consultants bribed foreign officials. Bethesda-based Lockheed could terminate the acquisition after today's deadline passes.
The deadline for the acquisition, which was announced in September, has been extended twice already and "Titan asked us to amend the agreement again to authorize another extension. We declined to do so," Lockheed spokesman Tom Jurkowsky said last night. "We weren't under any obligation to amend the agreement again."
Jurkowsky declined to comment on whether the company would abandon the acquisition but noted, "When the agreement was amended in April, the current deadline of June 25 was one of the key terms that we specifically negotiated with Titan."
Lockheed pursued Titan for its growing government information technology business, which includes contracts with the Federal Emergency Management Agency, computer simulation of weapons of mass destruction, and the Defense Threat Reduction Agency. A majority of Titan's 11,000 employees have security clearances, a key selling point at a time when intelligence programs are among the fasting-growing defense sectors and applications for new clearances are backed up for months.
But Titan's largest contract is to provide linguists for the Army Intelligence and Security Command. That contract has come under scrutiny by Congress since an Army report alleged that at least one Titan employee working at the Abu Ghraib prison near Baghdad may have been present during abuses of Iraqi prisoners.
The unrelated bribery investigation, which began before reports of the Iraqi prisoner abuse surfaced, has focused on Titan's Datron World Communications division, which operates mostly in the Far East, and possible illegal payments in Saudi Arabia and the African country of Benin. In addition to the criminal investigation, the Securities and Exchange Commission staff has recommended civil charges be lodged against Titan. The company set aside $3 million to pay possible fines resulting from the bribery probes.
In April, Lockheed lowered the price for Titan by $200 million and said that resolving the Justice investigation or entering into a plea agreement by today was necessary to close the deal.
Titan said in a statement last night that it "has not received any indication from Lockheed Martin concerning whether or not it will terminate the merger agreement" if a plea agreement isn't reached today.
Trading in Lockheed Martin and Titan shares were halted on the New York Stock Exchange minutes before closing, pending yesterday's announcement. Lockheed, which stopped trading at about 3:50 p.m., gained 30 cents to close at $52.11. Titan stopped trading at the same time after losing $1.08, or 5.6 percent, to close at $18.24.
Titan shareholders, who approved the acquisition with 98 percent of the vote, would receive $20 in cash per share if the deal is finalized -- a premium on yesterday's close.