End of era as US firm buys Marconi rump

More than a century of proud British history in the telecommunications industry is about to come to an end. The company formerly known as Marconi has agreed to sell what remains of the business to a US private equity group.

Last year, Marconi sold its hardware manufacturing business to Ericsson for £1.2bn, leaving a rump that provided a range of telecoms services which was renamed Telent.

Telent agreed a deal to sell out to Fortress Investment Group yesterday for £346m or 529.5p a share.

Marconi's stock market value - it was listed as the General Electric Company in 1900 - peaked at £35bn.

The transaction will result in another bumper pay day for Mike Parton, the chief executive, who will not remain with the business under its new ownership. He will see more than half the 1 million share options he holds vest as a result of the deal, providing him with more than £2.6m. He will also get about £500,000 as a pay-off for the loss of his job.

Last year, Mr Parton earned £619,000 and banked a further £2m by selling the free shares he was awarded as part of a restructuring of a nearly bankrupt Marconi in 2003.

After the Ericsson deal, the future of the remaining business was complicated by the fact that it had a huge pension fund which, although fully funded, made the Telent business vulnerable to swings in the economy and the markets. Telent tried and failed to sell the pension fund, which has assets and liabilities of £2.7bn, with 64,000 members.

Mr Parton said: "We talked to everybody who was anybody in the last six months and we have an offer for the company we believe is fair value. It's a £300m business with a £3bn pension fund and that's a material consideration."

The General Electric Company started in 1886 as a maker of electrical equipment such as bells and telephones.

The business later expanded, making a huge range of products. Under Arnold Weinstock, who joined GEC as the managing director in 1963, it expanded further, buying the radio and electronics maker Marconi in 1968.

George Simpson replaced Lord Weinstock in 1996. He sold GEC's defence business to British Aerospace and spent $6bn (£3.2bn) buying the US telecoms equipment makers in 1999, changing the company's name to Marconi to emphasise the new communications focus.

However, when the telecoms market collapsed in early 2000, Marconi was faced with plummeting revenues and was accused of having overspent on acquisitions.

The beginning of the end came in April last year when Marconi failed to clinch any part of a £10bn technology-upgrade contract with BT.