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updated 10/14/2003 2:50:50 PM ET 2003-10-14T18:50:50

Lockheed Martin, the U.S. defense contractor, said on Monday night it had agreed to acquire Titan Corporation for about $1.8 billion in cash and shares, making it Lockheed’s largest acquisition since buying Loral in 1996.

Under the deal, Titan shareholders are being offered $22 per share in cash, an equivalent amount of Lockheed Martin common stock or a combination of the two. The cash offer represents a premium of about 30 percent on Titan’s closing share price on Monday.

Lockheed will assume about $580 million of Titan debt as part of the deal. Lockheed said it expected the acquisition would add to earnings immediately. The deal was approved by the boards of directors of both companies on Monday night and is expected to be completed in the first quarter next year subject to approval by Titan shareholders, government regulatory reviews and other conditions.

Titan, based in San Diego, provides communications, intelligence and homeland security equipment, primarily for the U.S. government.

“Titan provides additional presence within the U.S. Government customer base and expands our competencies. Titan is an excellent fit with Lockheed Martin, and its acquisition is consistent with our disciplined growth and cash deployment strategies,” said Vance Coffman, Lockheed Martin chairman and chief executive.

Titan, which employs 11,000, generated revenue of $1.4 billion in 2002.

© The Financial Times Ltd 2010. "FT" and "Financial Times" are trademarks of the Financial Times.

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