GEC drops offer after closer look at Ferranti: Hopes of saving electronics group crushed as receivers move in

FERRANTI, the defence electronics company employing 3,000 people in Britain, asked its banks to appoint receivers yesterday after Lord Weinstock's General Electric Company withdrew its 1p-a-share bid.

The historic British company is expected to be sold off piecemeal, with GEC likely to cherry-pick the best bits of Ferranti's military businesses.

GEC's offer was conditional on its 'due diligence' inquiry into Ferranti. The company obviously uncovered something it did not like in the books, but declined to be more specific.

David Newlands, GEC's finance director, said: 'It's very sad. In making our bid we wanted to preserve Ferranti's name and goodwill. If the receiver feels he wants to talk to us, then we will be happy to talk to him.'

News of its withdrawal came as GEC announced a rise in half-year pre-tax profits from pounds 356m to pounds 360m, but warned analysts that their profit forecasts for the full year were too high.

Last night John Talbot and Murdoch McKillop of Arthur Andersen were appointed as joint administrative receivers of Ferranti International and certain of its subsidiaries.

As revealed in the Independent last week, Ferranti's 15 banks asked Arthur Andersen to draw up a contingency plan should the offer fail. The banks, which are owed pounds 110m, include National Westminster, Barclays, UBS and ABN. A further pounds 40m is owed to other creditors.

GEC had always appeared lukewarm on the deal, saying virtually nothing about it publicly. The Independent learnt that GEC was encouraged to make a token offer - a bid that Ferranti's chairman, Eugene Anderson, described as guaranteed to irritate - by the Ministry of Defence, which did not want bits of the company falling into foreign hands.

During his three years in the job, Mr Anderson said he had approached every suitable company about saving Ferranti, but GEC was the only one to make a bid, offering pounds 10.1m for the ordinary shares and pounds 1.29m for the preference shares.

GEC's move came ahead of a vote due to take place next week on the offer. It would have required acceptances from 90 per cent of shareholders. John Katz, of the Ferranti shareholders' action group, mounted a vigorous opposition campaign. Mr Katz wanted Ferranti placed in administration. He was not available for comment.

Tressan MacCarthy, analyst at Panmure Gordon, said: 'Obviously GEC will buy the bits it wants out of receivership. To be honest, they were going to be cutting it fine to get the 90 per cent shareholder acceptance they wanted with Mr Katz up in arms.'

By yesterday valid acceptances had been received for 55.8 million ordinary shares, 5.52 per cent of the total. On Monday big institutional investors said they would probably accept the GEC bid in the absence of a higher offer.

GEC will be interested in Ferranti's naval systems operations, the simulation training business, and the fuse-maker in America. The military businesses employ about 2,500.

Ferranti almost collapsed in 1989 under the weight of a pounds 215m fraud uncovered at International Signal and Control, the American arms exporter it bought for about pounds 260m in 1987. By August this year, Ferranti had an order book of just pounds 178m with new contracts hard to find.

When bidding for the important Delmon Eye air defence contract for Bahrain was delayed recently, Mr Anderson realised Ferranti's future lay with either GEC or the receiver.

Founded in the 1880s, when Sebastian Ziani de Ferranti patented an alternator, the company has been a defence supplier since the First World War. It became a household name with a move into domestic appliances and radio.

GEC shares fell 13p to 320.5p, despite a 5 per cent dividend increase to 2.81p, after Lord Prior, chairman, said that in the light of current trading conditions profits were unlikely to be substantially higher than the previous year's pounds 863m. Forecasts were reined back from pounds 935m to around pounds 875m.

Operating profits fell from pounds 285m to pounds 267m thanks to setbacks in electronics systems and telecommunications. This was offset by a rise in investment income and interest from pounds 62m to pounds 81m as the group's net cash balances rose by pounds 231m to pounds 2.4bn. Group order books rose by 5 per cent to pounds 13bn.

View from City Road, page 38

(Photograph omitted)

Suggested Topics
PROMOTED VIDEO
Arts and Entertainment
Alfred Molina, left, and John Lithgow in a scene from 'Love Is Strange'
film
News
A model of a Neanderthal man on display at the National Museum of Prehistory in Dordogne, France
science
News
Dawkins: 'There’s a very interesting reason why a prince could not turn into a frog – it's statistically too improbable'
newsThat's Richard Dawkins on babies with Down Syndrome
Sport
Malky Mackay salutes the Cardiff fans after the 3-1 defeat at Liverpool on Sunday
footballFormer Cardiff boss accused of sending homophobic, racist and messages
Arts and Entertainment
Martin Amis: Taken to task over rash decisions and ill-judged statements
booksThe Zone of Interest just doesn't work, says James Runcie
Life and Style
life – it's not, says Rachel McKinnon
Arts and Entertainment
Eye of the beholder? 'Concrete lasagne' Preston bus station
architectureWhich monstrosities should be nominated for the Dead Prize?
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Corporate Tax Solicitor

Highly Competitive Salary: Austen Lloyd: CITY - HIGHEST QUALITY INTERNATIONAL ...

Relationship Manager

£500 - £600 per day: Orgtel: Relationship Manager, London, Banking, Accountant...

Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Test Lead (C#, Java, HTML, SQL) Kingston Finance

£40000 - £55000 per annum: Harrington Starr: A Global Financial Service Organi...

Day In a Page

Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape
eBay's enduring appeal: Online auction site is still the UK's most popular e-commerce retailer

eBay's enduring appeal

The online auction site is still the UK's most popular e-commerce site
Culture Minister Ed Vaizey: ‘lack of ethnic minority and black faces on TV is weird’

'Lack of ethnic minority and black faces on TV is weird'

Culture Minister Ed Vaizey calls for immediate action to address the problem
Artist Olafur Eliasson's latest large-scale works are inspired by the paintings of JMW Turner

Magic circles: Artist Olafur Eliasson

Eliasson's works will go alongside a new exhibition of JMW Turner at Tate Britain. He tells Jay Merrick why the paintings of his hero are ripe for reinvention
Josephine Dickinson: 'A cochlear implant helped me to discover a new world of sound'

Josephine Dickinson: 'How I discovered a new world of sound'

After going deaf as a child, musician and poet Josephine Dickinson made do with a hearing aid for five decades. Then she had a cochlear implant - and everything changed
Greggs Google fail: Was the bakery's response to its logo mishap a stroke of marketing genius?

Greggs gives lesson in crisis management

After a mishap with their logo, high street staple Greggs went viral this week. But, as Simon Usborne discovers, their social media response was anything but half baked
Matthew McConaughey has been singing the praises of bumbags (shame he doesn't know how to wear one)

Matthew McConaughey sings the praises of bumbags

Shame he doesn't know how to wear one. Harriet Walker explains the dos and don'ts of fanny packs
7 best quadcopters and drones

Flying fun: 7 best quadcopters and drones

From state of the art devices with stabilised cameras to mini gadgets that can soar around the home, we take some flying objects for a spin
Joey Barton: ‘I’ve been guilty of getting a bit irate’

Joey Barton: ‘I’ve been guilty of getting a bit irate’

The midfielder returned to the Premier League after two years last weekend. The controversial character had much to discuss after his first game back
Andy Murray: I quit while I’m ahead too often

Andy Murray: I quit while I’m ahead too often

British No 1 knows his consistency as well as his fitness needs working on as he prepares for the US Open after a ‘very, very up and down’ year
Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home