L-3 swallows yet another defense firm
In a further chapter in the ongoing shrinking of the US defense industry, L3 Communications Holdings recently announced it would purchase Titan, Inc. in a $2 billion deal. L-3 is not as well known as Lockheed Martin or Raytheon, but that's no surprise. The company has existed only since 1997. Still, L-3 is one of the larger defense contractors, with almost $7 billion in sales and growing fast. The company specializes in avionics and communications systems, with about 3/4 of its revenues coming from the military side. On the civilian side, it is involved in military-related areas like airport baggage examination, video surveillance, and black-box flight recorder systems.
Titan is a major supplier of IT services to government and military, with contracts with the departments of defense and homeland security, along with intelligence agencies. It has about $2 billion in income. As with its rivals, L-3 realizes that hardware is not enough these days, and has moved to build its It expertise. (Interestingly, Lockheed-Martin tried, and failed, to acquire Titan in 2003, a case where th government put soem limits on defens eindustry consolidation.
L-3 Communications was originated as a holding company for unwanted divisions through a joint effort by Lockheed Martin and investment bank Lehman Brothers. It started off with several cast-off pieces from the merger of Lockheed Martin and Loral in 1996, along with a Lockheed-Martin plant that Lockheed had previously acquired form General Electric.
Since that time, there has been a breathtaking series of moves, buying up small and mid-size military/aerospace and communications companies, as well as discarded divisions of other defense giants.
The table illustrates this mad dash for growth andmakes one wonder how all hese new divisions can be integrated and even managed efficiently.
L-3 Acquisitions
