Rosenstein Acquires 3.5% Stake in Titan Corp.

Barry Rosenstein, the hedge fund manager who joined financier Carl Icahn in a proxy fight with Kerr-McGee Corp., acquired a 3.5% stake in U.S. defense contractor Titan Corp. valued at about $66 million.

Rosenstein’s Jana Partners bought Titan’s shares in the first quarter, months ahead of speculation that Titan may be bought by another company, Rosenstein said in a May 20 phone interview from the fund’s office in San Francisco.

San Diego-based Titan may be in takeover talks with companies including L-3 Communications Holdings Inc., the Wall Street Journal and New York Times reported May 19, without identifying the source of their information.

Titan, the largest supplier of translators to the U.S. Army and 12th-largest supplier of secure computer networks to military and government agencies, in March settled a criminal investigation that derailed a planned $1.66-billion sale to Lockheed Martin Corp. last year.

“We bought it because we think it’s a good company that has turned things around,” said Rosenstein, 46, the founder and managing partner of Jana Partners. “There is also the possibility the company could be sold. I wasn’t counting on it. If it happens, it happens.”

Titan’s sales rose 23% to $559 million in the first quarter. Excluding its translation-services business, sales from its other areas, including work on military computer and communication systems, would still have grown 16%, said Timothy Quillin, an analyst in Little Rock, Ark., with Stephens Inc. He rates Titan’s shares “equal weight” and doesn’t own them.