Marconi, the telecoms company, won approval from shareholders yesterday to sell most of its business to the Swedish mobile phones giant Ericsson for £1.2bn, despite facing fierce criticism from investors at an emergency general meeting.
The deal, which will be completed next month, will result in the disappearance of the Marconi name from the telecoms industry, 110 years after the Italian scientist Guglielmo Marconi sent the first radio signal. Ericsson will acquire almost all of Marconi, leaving a small services business that will operate under the new name of Telent.
The chief executive of Marconi, Mike Parton, said he was delighted shareholders had backed the Ericsson sale. But Mr Parton and his fellow board members were savaged by individual shareholders, many of whom regard the special dividend of 275p a share they will receive as scant consolation for the collapse of the company.
In the late Nineties, shares soared in Marconi, which for decades traded as the General Electric Company under the leadership of Lord Weinstock, and the company's market capitalisation peaked at £35bn. However, under the leadership of Lord Simpson, Lord Weinstock's successor, Marconi was hit hard by the collapse of the dot.com boom, and its failure in April to clinch any part of a £10bn technology-upgrade contract with BT forced the board to consider bid approaches.
At yesterday's meeting, a succession of shareholders accused Mr Parton and the Marconi chairman John Devaney of "running the company into the ground". One shareholder received applause from fellow investors after a bitter speech. "We've been bombed out - you're selling us down the river and it's an absolute scandal," he said.
Other investors attacked the remuneration package of Marconi directors. One said: "This situation is an egregious example of a failed remuneration system - you have been paid an enormous amount of money to drive this company into the ground."
Mr Parton was paid £619,000 last year, while Mr Devaney earned £320,000. Mr Parton has been a particular focus of investor anger after banking £2m last month when selling free shares he received as part of a restructuring of Marconi in 2003. The trade union Amicus accused Mr Parton of "obscenity and insensitivity" after the sale, which came only months after Marconi announced hundreds of job losses at its UK business. Ericsson has warned that further job losses may follow once its deal with the telecoms company is completed.
Marconi will use £185m of the Ericsson cash to support its pension fund, which has a £218m deficit. It will place a further £490m in an escrow account to support the fund over the next 80 years.Reuse content