Lockheed says deal to close today; Bid to control Comsat said to have received shareholder approval; $2.5 billion sale at stake; Takeover still needs Congress to approve satellite reform bill; ; Acquisitions


Lockheed Martin Corp. said yesterday that it would likely complete its tender offer today to take control of 49 percent of Comsat Corp. If the tender is not finalized today, either Lockheed or Comsat could walk away from their $2.5 billion acquisition agreement.

Even if all goes as planned, Lockheed's bid to assume control of its Bethesda neighbor will have to wait until Congress approves legislation allowing the transaction to go forward.

"All is quiet," Lockheed spokesman Charles P. Manor III said yesterday. "We're on a path for closing tomorrow."

Said Comsat spokesman Jay Ziegler: "Lockheed Martin has advised us they are continuing to review the documents, but they do not see any obstacles and they intend to close by noon on Saturday."

For the deal to proceed, at least 33 percent of Comsat shareholders had to agree to the tender by the close of trading yesterday. Ziegler said the threshold had been passed, but that the specific percentage of shares favoring the tender was not available.

In the first phase of the deal, Lockheed would purchase 49 percent of Comsat's common stock at $45.50 a share, or $1.3 billion, and assume $455 million in debt.

Analysts generally agreed that the deal would close today. "I don't imagine the tender encountering any problems," said William Kidd of C. E. Unterberg, Towbin in New York.

However, Tom Burnett of Merger Insight in New York said he found it odd that the companies had not issued any joint statements so late in the game before the tender deadline. "It's not the normal practice," he said. "By this point, you normally see companies embracing each other."

Burnett declined to speculate about whether the tender would close today.

This has been an active week for the proposed Comsat-Lockheed marriage. The Federal Communications Commission gave the deal the green light Wednesday, with the Justice Department following suit Thursday.

While the FCC approved the acquisition, it also put forth rules that could make Comsat a less-attractive buy for Lockheed.

The agency voted Wednesday to end Comsat's exclusive right to provide American companies access to Intelsat, an intergovernmental satellite consortium that is moving toward privatization.

The FCC also limited to 5.58 percent the surcharge that Comsat could pass along to customers to cover expenses of international and regulatory work. Some had expected the surcharge to be 16 percent.

"We're still reviewing the FCC documents," Manor said.

Defense giant Lockheed views buying Comsat as a way to build its satellite communications division. Comsat was created by Congress in 1962 to act as the U.S. representative in international satellite networks.

Comsat's government origins have added a complicated layer to its deal with Lockheed. For Lockheed to acquire the remaining 51 percent of Comsat, Congress must alter the legislation that brought Comsat into being.

The Senate approved the necessary changes in July. However, House Commerce Committee Chairman Thomas J. Bliley Jr., a Virginia Republican, has said he does not want the lower chamber to sign off on the acquisition until satellite reform legislation is passed.

If Congress approves the deal, Lockheed would issue one share of its stock for each remaining share of Comsat stock.

Kidd said the House would probably follow the lead of regulators and the Senate and wave the deal through to completion relatively soon. "I think the House will be fairly supportive and get this thing done," he said.

In a separate announcement yesterday, Comsat said it had won a $30 million contract to develop satellite-system software for Ericsson AB.

In yesterday's trading, Lockheed shares gained 75 cents after two consecutive days of decline, closing at $34.4375. A day after posting a $7.50 gain, Comsat's stock rose $1 a share to close at $36.

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