Racal poised for break-up with pounds 750m telecoms sale

RACAL ELECTRONICS is poised to sell its telecoms arm to Energis for pounds 750m, paving the way for the final break-up of the group, one of the biggest industrial success stories of the post-war years.

The company, led by its 73-year-old chairman Sir Ernest Harrison, is understood to have given Energis exclusive rights to negotiate the purchase of the business and an announcement is expected in the next four to six weeks.

The sale of the telecoms business is expected to be followed by the auctioning off of Racal's two other businesses - defence and industrial electronics - bringing down the curtain on a half-century of corporate wheeling and dealing.

Provided the sale to Energis goes through, it will cap a remarkable hat- trick of successes for Sir Ernest who has already demerged the group twice, first by floating Vodafone and then by spinning off the security arm Chubb. Anyone who invested pounds 1,000 in Racal in 1966, the year Sir Ernest took the reins, would now be sitting on pounds 5m.

Racal bought the telecoms business from British Rail for pounds 135m in 1995 and had originally planned to float it on the stock market. A takeover of the business by Energis would consolidate its position as Britain's third telecoms group behind British Telecom and Cable & Wireless, with sales in the coming year approaching pounds 600m. It would also give Energis a more comprehensive national network, taking in Scotland and Wales as well as a string of lucrative government and defence telecoms contracts.

Racal has been attempting to dispose of its telecoms interests for two years. Earlier this year Sir Ernest rejected a pounds 700m offer for the business from Callahan Associates, an investment vehicle run by the former president of US West, Dick Callahan.

Although the performance of Racal's telecoms arm has been pedestrian in comparison with the likes of Energis, achieving only single-figure sales growth, it is acknowledged as having a high quality network with huge potential. Sales last year were pounds 296m - an increase of less than 7 per cent on the previous year.

Industry sources cautioned, however, that the sale to Energis was not yet a done deal. "There is still a lot of information to crunch, which means we are talking about several weeks until completion," said one. "Ernie must also be careful not to be too greedy. Energis is the natural owner of this business but it does not have to own it and it will not overpay."

Racal's defence electronics arm, which specialises in electronic warfare radar and command information systems, would almost certainly be acquired by one of the big defence contractors, with British Aerospace-Marconi, Thomson CSF and Raytheon of the US all possible suitors.

Racal also has a 27 per cent stake in the National Lottery operator, Camelot, held through its industrial electronics division which makes secure payment systems, testing instrumentation and recording equipment. The group disposed of its heavily loss-making data communications businesses a year ago.

Racal was founded in 1950 by Ray Brown and Calder Cunningham who gave it its name by joining together the first three letters of their christian names. Their first product was a radio receiver. Racal Telecoms is valued at just over pounds 1bn today but VodafoneAirtouch, as it is now known, is worth pounds 73bn alone.

Start your day with The Independent, sign up for daily news emails
News
people
News
A survey carried out by Sainsbury's Finance found 20% of new university students have never washed their own clothes, while 14% cannot even boil an egg
science...and the results are not as pointless as that sounds
News
politicsIs David Cameron trying to prove he's down with the kids?
News
Cumberbatch was speaking on US television when he made the comment (Getty)
people
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Client Services Manager - Relationship Management - London

£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

Recruitment Genius: Credit Controller / Customer Service

£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

Guru Careers: In-House / Internal Recruiter

£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Day In a Page

Woman who was sent to three Nazi death camps describes how she escaped the gas chamber

Auschwitz liberation 70th anniversary

Woman sent to three Nazi death camps describes surviving gas chamber
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea