Titan shareholders approve Lockheed Martin offer
- By Roseanne Gerin
- Jun 07, 2004
Titan Corp. shareholders today overwhelmingly approved a $2.2 billion takeover bid by defense giant Lockheed Martin Corp., moving the deal a step closer to completion, said Wil Williams, Titan's vice president of corporate communications.
More than 98 percent of Titan's shareholders approved the takeover of the defense IT company by its larger rival Lockheed Martin, Williams said. The 55,244,545 shareholders who voted in favor of the merger represent 65.8 percent of the total outstanding votes entitled to be cast, while 815,209 shareholders voted against the takeover.
Lockheed Martin has stipulated that Titan also must resolve pending legal action against the company by the Justice Department before the acquisition can take place. In addition, Titan is facing legal action by the Securities and Exchange Commission, though it is unclear whether the SEC investigation will affect the deal.
At present, San Diego-based Titan is planning to respond to an SEC notice that agency staff intends to recommend that the SEC bring civil action against Titan for alleged violations of U.S. securities law. Both the SEC and the Justice Department began investigating Titan after allegations emerged in February that company employees had bribed foreign government officials in exchange for business.
Under the agency's procedures, Titan can respond before the SEC staff makes an official recommendation. A Titan press release issued Friday said the company would respond promptly, although Williams could not say when the company would send a reply. The company has set aside $3 million to cover any fines arising from the SEC's investigation.
The Justice Department's investigation also continues, but Williams declined to comment on it.
Under the stipulations of the company's acquisition agreement with Lockheed Martin, the Justice Department must give Titan a written statement exonerating it from the allegations, or Titan must enter a plea agreement and complete the sentencing process. Bethesda, Md.-based Lockheed Martin must consent to any plea the company makes.
Either company can terminate the agreement if these stipulations are not satisfied or waived and if the merger is not completed by June 25. But should Titan enter into a plea agreement with the Justice Department on or before that date, the companies can end their agreement if the merger is not completed by the earlier of three business days after a signed judgment has been entered or Sept. 24, 2004.
Williams expressed optimism that both companies were working toward the completion of the deal.
"We're hopeful we will continue making progress towards meeting the conditions needed for closure," said Thomas Greer, a Lockheed Martin spokesman.
Titan had rescheduled its shareholders vote twice because of the investigations.
Earlier this year, some of Titan's shareholders filed lawsuits against the company, accusing its executives of concealing the alleged illegal payments to foreign government officials or violating their fiduciary duties by not preventing them. Others are seeking compensation for the reduction of the value of the company's shares in light of Lockheed Martin's buyout. Lockheed had reduced its offer to $20 per share from $22 per share after the SEC's and the Justice Department's investigations started.
Lockheed Martin announced its initial purchase offer in September 2003.
Titan also has been in the spotlight since one of its employees was named in an Army report issued in February about the prisoner-abuse scandal at the Abu Ghraib detention facility outside Baghdad. The employee has been terminated, although Williams declined to state the reason. Titan provides translation services to Army personnel in Iraq.