Marconi buys into wireless know-how

Click to follow
The Independent Online

Marconi, the telecommunications equipment maker, returned to the acquisition trail yesterday with the $618m (£390m) purchase of Metapath Software International, a US wireless network software producer.

It marked the former electronics and defence group's latest move to transform itself into a major communications infrastructure and software provider. Marconi, which has focused on traditional fixed-line phone equipment since quitting the defence electronics business last year, when it was known as GEC, plans to use the acquisition to expand in the fast growing wireless-phone business.

Marconi's chief executive, Lord Simpson, said: "The opportunities generated by this combination are very exciting and I am confident the sales synergies we realise will be multiples of MSI's current revenues. MSI takes Marconi further up the value chain in network services and wireless and brings a team of top-flight telecom professionals ... providing high-level software solutions."

The consideration is to be comprised of $310m in cash and $308m in Marconi stock plus and $104m of in-the-money options and warrants, which are to be rolled over into new Marconi options. That could rise by a further $179m subject to performance targets and continuing employment of MSI employee option holders, including senior management.

In 1999, MSI had sales of $93m, while in the quarter to March sales grew 38 per cent from the year-ago period to $23m. Marconi stock closed up 8p at 750p yesterday, well below its year-end high of 1,095p.