Sunday, October 05, 2003

Lockheed-Martin to acquire Titan Corp. In the highly concentrated US defense industry, the acquisitions keep on coming. And the favored targets of all are those companies that will profit from the biggest growth areas in defense, anti-terrorism and homeland security. That's the impetus behind the recent buyout of Titan Corp. by Lockheed-Martin, the number one defense firm. The $2.4 billion deal builds on Lockheed's already major presence in IT services, especially for surveillance and intelligence gathering. Titan makes computer systems used by the Departments of Defense and Homeland Security NASA, NSA, and other agencies. According to a September 15 Wall Street Journal article on the merger, this trend to acquire defense IT companies is accelerating: The proposed deal, subject to government approvals, would be the latest consolidation among companies that provide information-technology services to the government. For example, General Dynamics Corp. in June agreed to pay $1.2 billion for Veridian Corp. And Lockheed last month agreed to buy most of the federal computer outsourcing unit of Dallas-based Affiliated Computer Services Inc., paying about $550 million and swapping its commercial computer-outsourcing operation in exchange for Affiliated's federal computer contracts. Titan until recently had both private and public sector interests. The private areas included food irradiation and wireless telephony, but those efforts have been sold or spun off in the past few years, to allow Titan to concentrate on government work. One big asset for the company is a large number of employees already with high security status for classified work. It ranks as #15 among federal IT contractors in a recent Washington Monthly listing. In fact, as the Washington Monthly reports, Titan recently won a federal big contract over Lockheed-Martin, namely "the National Security Agency's Enterprise Architecture and Decision Support program, beating out a heavyweight team that included Northrop Grumman Corp., Lockheed Martin Corp., Booz Allen Hamilton Inc. and Science Applications International Corp."  If you can't beat them, buy them. The merger will reduce the number of qualified bidders for such jobs by one, and Lockheed's prominent position in defense and government IT can only be boosted by the infusion of new talent and in-place contracts. 6:35:11 PM

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