Outlook: Simpson rolls out his GEC strategy

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The Independent Online
IN THE dim distant past, a company called Plessey became famous for a piece of cutting-edge technology called System X. This was the kit that BT used to modernise its network, ripping out old analogue exchanges and replacing them with shiny new digital ones. With a giant captive customer in the bag, Plessey thrived on the proceeds and used them to expand overseas.

Throughout it all, Plessey was persistently stalked by GEC's Arnold Weinstock. Today's consolidating industrialists have got nothing on this original master of the art. In the end the old fox proved a superior tactician to Plessey's Sir John Clark.

He eventually achieved the rationalisation of UK electronics he sought by pairing up with Siemens of Germany and swallowing up Plessey, System X and all.

The telecoms business was renamed GPT and was carved up 60 per cent to Lord Weinstock and 40 per cent to the Germans. Yesterday his successor at GEC, Lord Simpson, wrote the final page of this corporate vignette by buying out Siemens' stake for pounds 700m.

This is not the first deal hatched by Lord Simpson since he got into gear at GEC and it will not be the last. He has just completed the pounds 800m acquisition of the US defence electronics business Tracor and is about to complete the joint venture between Marconi and Alenia of Italy. Stand by now for further defence electronics acquisitions Stateside and a string of bolt-on deals involving telecoms. GPT is not about to invent another System X - they only come along once in a generation - but it will increase its presence in growth areas of the telecoms market like data transmission and intelligent networks.

After a cautious start the City seems to be warming to the Simpson story and the shares have comfortably outperformed the index since the spring.

Not only does this begin to make Lord Simpson's pounds 10m pay package attainable, it also bolsters GEC's firepower if and when he goes for the big one. The City continues to anticipate a GEC-British Aerospace merger and who is to say it will be disappointed?

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