GEC restructuring gains impetus as Mayo joins board

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The Independent Online
The restructuring of GEC took a big step forward yesterday after the defence electronics, telecoms and engineering group appointed one of the architects of the ICI demerger as its new finance director.

John Mayo, finance director with the pharmaceuticals giant, Zeneca, will join GEC on 1 October to work alongside managing director George Simpson on the overhaul of the group.

His appointment heightens expectations that GEC will push ahead with plans to demerge the power engineering and rail joint venture, Alcatel Alsthom, first unveiled last month.

But Mr Mayo, 42, is also expected to bring a new urgency to the disposal of GEC's unwanted businesses, such as the semiconductor division, while pressing ahead with the strategy of seeking partners for GEC Marconi in defence electronics.

Mr Mayo was a senior corporate financier with the investment bank SBC Warburg which defended ICI against Hanson. He went on to join the company, advising the ICI chairman, Sir Denys Henderson, on its demerger in 1992 before joining Zeneca, the demerged drugs arm.

Mr Simpson yesterday paid tribute to him as one of the country's best finance directors. "His experience and capabilities much fit the nature of the task at GEC. He is strong on corporate activity and that is exactly what we need if we are to make progress."

His appointment in place of David Newlands, who left as finance director last month, takes the boardroom overhaul of GEC a key stage further. It will be completed in the first quarter of next year when the group appoints a non-executive chairman to take over from Lord Prior, the former Conservative cabinet minister.

GEC has asked a well-known industrialist to take on the chairmanship but is having difficulty negotiating terms for his departure from his existing job. The City reacted warmly to the news of Mr Mayo's appointment, marking GEC's shares up 18.5p to 362.5p.

They fell sharply last month on the day that Mr Simpson announced his blueprint for the group on disappointment that he had not been able to unveil any firm deals.

Since then, however, GEC has agreed a tie-up with the defence electronics arm of Italy's Finemecannica. It also intends to submit a bid later this month for Siemens Defence, reckoned to be worth around pounds 300m. The other bidders are Thomson CSF and Alcatel of France, and a partnership between British Aerospace and Daimler Benz.

Alcatel Alsthom, which supplies the Channel Tunnel Eurostar trains, would be worth about pounds 4bn as a separately quoted company.

Mr Simpson said that discussions were progressing "more intensely" with Alcatel, which owns the other half of the business, and GEC remained confident that it could announce the outcome by mid-October.

GEC's preference is to demerge its 50 per cent interest in GEC Alsthom, leaving existing shareholders with shares in both GEC and the newly-quoted group.

People & Business, page 18