Racal poised for break-up with pounds 750m telecoms sale
Monday 13 September 1999
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.
- 1 Stolen Instagram photo sells for $90,000
- 2 Before you complain about your GP, this is what you need to know about actually doing the job
- 4 'Don't blame all men for rape' campaign backfires spectacularly
- 5 Charlie Charlie Challenge explained: not a Mexican demon being summoned — it's gravity
UK's biggest male rape charity Survivors UK has state funding slashed to zero despite 120% rise in men reporting sexual violence and seeking help
Priest warns pupils the 'Charlie Charlie Challenge' is 'demonic activity'
'Don't blame all men for rape' campaign backfires spectacularly
Iran launches anti-Isis cartoon competition 'to expose true nature of Islamic State'
Fifa corruption arrests: Sepp Blatter 'quite relaxed' and confident he is 'not involved'
EU referendum: David Cameron's rules are a 'democratic disgrace', says French-born Scottish politician set to be denied a vote
The day that Britain resigned as a global power
SNP fury as HS2 finds 'no business case' for taking fast train service to Scotland
Australian man punched in the face for defending Muslim women from abuse on train
A nation of inequality: How the UK is failing to feed its most vulnerable people
EU referendum: David Cameron to deny EU migrants and under-18s the chance to vote
iJobs Money & Business
£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...
£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...
£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...
£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...