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Grumman shows interest in local systems maker

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Posted: Friday, June 9, 2006 12:00 pm | Updated: 3:16 pm, Wed Aug 15, 2012.

By Debbie Stevenson

Killeen Daily Herald

Two top defense contractors at Fort Hood could fall under the same umbrella, if speculation Thursday on Wall Street is correct.

Shares of L-3 Communications Holdings Inc. soared Thursday on speculation that Northrop Grumman Corp. might buy the military's leading communications systems maker. The rumors followed the death of L-3 co-founder Frank Lanza.

Lanza, 74, died Tuesday while recovering from surgery to deal with complications caused by acid reflux.

Lanza founded New York-based L-3 in 1997. With roots in defense contractors such as Lockheed Martin Corp., the No. 1 federal prime contractor, Lanza is credited with building L-3 through a series of buyouts and keeping shareholders happy with a 110 percent rise in their stock value in the last five years. A $2 billion buyout of Titan Corp. last year will go down as Lanza's largest deal.

The name L-3 was formed from the names of Lanza, business partner Robert LaPenta and company financiers Lehman Brothers.

Forbes estimated the company's market value at $9.93 billion with $12.3 billion expected in revenues for this year.

Last year, L-3, which has 44,200 employees and is ranked 15th on the federal prime contractors list for 2005, took the lead role on $4.7 billion worth of Defense Department contracts last year, according to Pentagon reports.

At Fort Hood, L-3 Communications Vertex Aerospace LLC has a 10-year contract worth up to $2 billion signed Aug. 14, 2004, to provide aviation joint administrative management support services, according to the post's contracting command Web site.

Northrop Grumman, the No. 2 federal prime contractor, has a railhead operations contract worth more than $2.8 million at Fort Hood. The corporation posted a record $30.7 billion earnings for 2005.

Representatives from both companies did not respond to calls seeking comment Thursday.

Bloomberg reported shares of L-3 had jumped more than 7 percent to $78.05 by mid-afternoon in New York Stock Exchange composite trading. Earlier, they climbed to $78.47, the biggest increase since July 2004.

The jump followed a slump in April after Lanza disclosed his health problems.

Also eyeing a possible L-3 acquisition are Lockheed Martin, General Dynamics, Raytheon and Boeing, Bloomberg reported. All were in the top 10 of the federal prime contractors list for 2005.

Contact Debbie Stevenson at deborah@kdhnews.com

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