Lockheed Martin, the world’s largest defense contractor, has pulled ahead in the race to buy Ultra Maritime, a naval-defense specialist, in a deal worth about $3.5 billion, CNBC reported Monday, citing people familiar with the talks. The discussions were still going on, and an agreement could be announced as soon as this week. None of the companies involved has confirmed the deal publicly.

Ultra Maritime is owned by the private-equity firm Advent International. Investment banks Guggenheim and JPMorgan are advising on the sale. The business builds much of the hardware navies use to hunt submarines: sonar buoys that can spot torpedoes and enemy subs, radar, electronic-warfare gear, and torpedo-defense countermeasures. Its main customers are the U.S. Navy and Britain’s Royal Navy.

For Lockheed, the logic is straightforward. The company already sells sensors, sonar and combat systems to navies through its Rotary and Mission Systems division. Buying Ultra Maritime would bolt a specialized underwater-warfare maker onto a business already pointed at the same customers — at a moment when the Pentagon and its NATO allies are spending heavily to track submarines beneath the world’s oceans.

Money is a big reason this asset is drawing a crowd. Ultra Maritime’s revenue is on track to reach roughly $784 million in 2026, up from about $494 million in 2023, after Advent poured close to $170 million into new products over three years. The unit employs around 2,000 people across the “Five Eyes” nations — the United States, United Kingdom, Canada, Australia and New Zealand — that share military intelligence.

The business also has a foot in the door of newer technology. Last year Ultra Maritime teamed up with Anduril Industries, the fast-growing defense startup, to build next-generation anti-submarine systems that pair self-driving underwater drones with Ultra’s sensors. That kind of work fits the direction the U.S. government has been pushing, as officials lean on big contractors to make more weapons faster.

Advent built the wider Cobham Ultra group through two large British takeovers: the roughly £4 billion purchase of defense group Cobham in 2019, followed by the £2.6 billion buyout of Ultra Electronics two years later. Ultra Maritime is seen as one of the more valuable, harder-to-replace pieces of that collection, which is why it has attracted competing offers. Advent put the unit up for sale earlier this year, at one point seeking more than £3 billion, or about $4 billion.

Lockheed has not locked up the deal. Other bidders in the United States and Europe remain part of a competitive auction, and a rival could still come in with a richer offer. The identities of the other bidders have not been disclosed.

If the deal happens, it would rank among Lockheed‘s bigger recent purchases, and Wall Street will want to know how the company plans to pay for it. Lockheed carries a stock-market value of roughly $110 billion to $125 billion and has generated strong free cash flow, which it has historically used — along with borrowing — to fund smaller “bolt-on” acquisitions. Investors will be watching whether a $3.5 billion check changes the company’s plans for dividends or share buybacks.

A deal this size would also face government review on both sides of the Atlantic. Because Ultra Maritime has British roots and supplies the Royal Navy, any sale would likely be examined under the U.K.’s National Security and Investment Act, which lets British officials review or block foreign takeovers of sensitive defense firms. In the United States, the cross-border nature of the technology and customers could draw scrutiny from the Committee on Foreign Investment in the United States, known as CFIUS. Either review could stretch out the timeline for closing.

The report landed at a busy stretch for Lockheed and its chief executive, James Taiclet, who recently met with President Trump alongside other defense-industry leaders as the administration presses contractors to ramp up production. The company is scheduled to report second-quarter earnings on July 23, an event where management could be pressed on the status of the Ultra Maritime talks.

Investors have already reacted. Lockheed shares jumped about 4.6% last Thursday after the first reports of its lead in the bidding, then slipped in later trading. The stock has climbed roughly 13% so far in 2026, helped by rising defense budgets across NATO members since Russia’s invasion of Ukraine.

For everyday readers, the takeaway is less about submarines than about where defense dollars are flowing. Governments rattled by conflicts in Europe and the Middle East are pouring money into weapons makers, and the biggest contractors are using that cash to swallow smaller, specialized rivals. Deals like this one help decide which companies control the technology militaries will buy for the next decade — and which shareholders, workers and towns benefit from the spending.

JBizNews Desk

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