NEW YORK (CNN/Money) - L-3 Communications announced Friday that it has agreed to acquire defense contractor Titan Corp. for $2.65 billion, including debt.

The purchase price includes $23.10 a share in cash, or $1.97 billion excluding the debt. That provides little premium for Titan (Research) shareholders from Thursday's close. But Titan shares have climbed more than 20 percent in the last two weeks on speculation about a possible deal.

Titan shares jumped 11 percent on May 19 when the Wall Street Journal first reported talks between L-3 (Research) and Titan. While Friday's purchase price is only 1.4 percent above Thursday's close, it is a 22.5 percent premium from the close before that intial report.

The announced deal comes just less than a year after a previously announced deal for Titan was called off by another defense contractor, Lockheed Martin (Research), due to a foreign bribery scandal at Titan.

Lockheed had agreed to pay $22 a share for Titan in September 2003, but the Titan shares plunged 20 percent to $14.45 after the deal was canceled in June 2004.

Titan provides information and communications systems for the Defense Department. It has 12,000 employees, including more than 9,000 personnel with U.S. Government security clearances.

L-3 makes systems for communications with satellites, planes, ships and submarines. Government, primarily military contracts, accounts for three quarters of the company's business, according to business tracking service Hoover's.

"Homeland security systems, products and services are already a significant part of L-3's growth strategy and the acquisition of Titan will expand our portfolio in major areas," said a statement from L-3 CEO Frank Lanza.

L-3's statement said the deal should add about $2.7 billion of sales and 25 cents of diluted earnings per share to L-3's results of operations in 2006.

Neither companies' shares were trading in pre-market immediately following the announcment. Shares of L-3 gained 82 cents, or 1 percent, to $71.03 in Thursday trading. Its shares are up almost 4 percent since the first reports of merger talks. Shares of Titan gained 22 cents, or 1 percent, to $22.79 Thursday.