With BTG Purchase, Titan Becomes Bigger Player on Defense Field

Titan Corp. is acquiring government solutions and services provider BTG Inc. in a $141.9 million deal designed to strengthen Titan's presence in the defense and intelligence markets.

Titan is paying about $114.9 million in stock and $27 million in cash, the companies announced Sept. 20.

"While our capabilities are similar, there is little overlap in our customer base," said Eric DeMarco, executive vice president and chief operating officer of San Diego-based Titan. "As a result, this acquisition will further expand Titan Systems' reach into the U.S. military and intelligence operations market."

"This is a significant purchase," said Tom Meagher vice president of equity research at BB&T Capital Markets of Richmond, Va. "It increases Titan's government defense IT business by 25 percent."

The acquisition, which includes the assumption of approximately $32 million in debt, is expected to close by the end of this year.

BTG's approximately 2,000 employees will come under Titan Systems, the company's government information technology subsidiary. BTG will operate as a wholly owned subsidiary.

Founded in 1982, BTG of Fairfax, Va., provides systems and solutions development, analysis and consulting and integration services to U.S. defense, intelligence and other government customers.

With the acquisition of BTG, Titan Systems will have nearly $1.3 billion in revenue next year, including approximately $1 billion from government IT services, said Gene Ray, chairman, president and chief executive officer of Titan.

On July 31, BTG announced it has been awarded $34.4 million worth of new and extended contracts over a five-year period with U.S. defense and intelligence customers. Other 2001 government contracts include:

*Air Force geographic information systems services. In June, BTG won a $1.4 million contract to provide enterprise GIS support to Air Force installations in Alaska, Hawaii and Guam.
*Justice Department terrorist response support. In June, BTG-owned Research Planning Inc., Columbia, S.C., was awarded a $11.2 million contract to help prepare state and local officials to respond to possible chemical or biological terrorist attacks.

*Army battle simulation services. In May, BTG won a $47 million, nine-year award as a subcontractor to Anteon Corp., Fairfax, Va., to provide battle simulation services to the Army.

*Defense Department integrated broadcast service: In May, BTG won a $60 million,seven-year contract to develop the integrated broadcast service, which will disseminate to military commanders time-critical, lethal threat data.