Marconi seeks overseas saviour

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The Independent Online

Marconi, the struggling technology group, has embarked on a search for an overseas buyer after discovering last week it had been snubbed by BT in its latest £10bn investment in telecommunications equipment.

Marconi, the struggling technology group, has embarked on a search for an overseas buyer after discovering last week it had been snubbed by BT in its latest £10bn investment in telecommunications equipment.

Marconi's share price fell almost 50 per cent on the back of the news last week, wiping £400m off its market value. A strategic review of the company is under way, which is expected to result in the board formally putting the business up for sale when it announces its results on 17 May. Morgan Stanley is advising the company on its options.

Up to 2,500 of Marconi's 4,500-strong workforce are set to lose their jobs as a result of failing to win any of the business from BT, as the company makes a shift away from the UK to European markets. The job losses are expected to be made in Coventry and Liverpool, where the Labour Party won all of the available seats at the last general election.

Skip MacAskill, a spokesman for the company, confirmed yesterday that the Government had asked for an update on the situation, but insisted there had been no suggestion of intervention. He denied the company had appealed to the Government to provide a rescue package, as it has with MG Rover.

Mr MacAskill declined to comment on whether the company was looking for a buyer. "We can't speculate in terms of merger and acquisition activity," he said. "I know there has been some discussion about Morgan Stanley, but we have had a relation with them for a long time and we do a lot of things with them. We'll be giving more details at our results."

Marconi's chairman, John Devaney, hit out at BT on Friday, saying its handling of the situation had been "disgusting".

The company had expected to at least win a £500m contract from BT, which was instead handed to Ericsson, the Swedish telecoms technology company.

Although there are likely to be several overseas company's interested in making an offer for Marconi, its £118m pension deficit could bring down the price.

Rules introduced last month mean that acquiring companies are obliged to make provision for any pension deficits.

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