BETHESDA, Md. – Lockheed Martin Corp. scrapped plans to buy Titan Corp. for $1.66 billion Saturday after Titan failed to resolve a federal investigation of alleged overseas bribery that has dogged the planned merger for months.
The collapse comes after Titan missed a Friday deadline to settle with the Justice Department over the probe, a requirement Lockheed set for the merger. Titan's failure to enter a plea agreement or be cleared of wrongdoing gave Lockheed the right to walk away from the deal.
"We made every possible effort to make this happen, but it just reached a point where we didn't want the uncertainty surrounding this to continue indefinitely," said Lockheed spokesman Tom Jurkowsky.
Lockheed, eager not to inherit any liability Titan might face from the probe, had extended the deadline twice before to give Titan more time to reach a settlement. The second time, in April, it used the opportunity to lower the price from the original $1.8 billion offer.
After San Diego-based Titan said it would not be able to reach a resolution by Friday, Lockheed refused to extend the deadline again.
Lockheed had hoped to boost its government information technology business with the acquisition of Titan, a deal worked out last fall.
But in February, the Justice Department announced it was opening an investigation into whether consultants at Titan subsidiaries overseas violated the Foreign Corrupt Practices Act. The subsidiaries involved are Datron World Communications, Titan Wireless in Benin and Titan Secure Systems in Saudi Arabia.
The Securities and Exchange Commission has also notified Titan that it will likely file a civil case against the company over the alleged payments. The timing of that case did not affect the merger.
Titan's stock price fell sharply Friday when it became clear the deal had fallen through. Shares were down more than 20 percent for most of the day, closing at $14.53.
Analysts said it was unclear what would happen to Titan after the deal was terminated. Other defense contractors could try to acquire Titan, or Lockheed could make another bid to keep it from getting into the hands of competitors.
"They could come right back after this deal is dead the next day and make another offer," said Paul Nisbet of JSA Research.