British news on GBLX........
Monday, October 11, 1999 Published at 09:44 GMT 10:44 UK
Business: The Company File
Racal sells telecoms division
Racal is focusing on core operations
UK electronics firm, Racal, is to sell its telecoms
business to the American communications group, Global
Crossing, for £1bn.
The sale will boost Racal's end of year profits by £600m
- and investors are set to share in the takings as £500m
is returned to shareholders in a windfall. The cash
payout will be 167p a share.
As well as telecommunications, Racal's operations cover
defence electronics - including avionics, command and
control systems, radar, and radio and communications
equipment - and industrial electronics such as
communications recording equipment, point-of-sale
terminals and secure payment systems.
It is also a partner in the UK lottery operating company,
Camelot.
Racal Telecom
Racal began operating in telecoms in 1988 when it was
appointed by the UK government to set up and operate
the Government Data Network.
The business currently provides communications to
more than 30 government departments. The company
took over BR Communications in 1995 when British Rail
was privatised.
The deal gave the group control of the BR telecoms
network laid alongside intercity railway tracks across the
UK.
Global Crossing operates a state-of-the-art telecoms
network in the US and will use Racal's business as a
bridgehead into the European market.
Its huge cash offer beats a bid by UK group Energis,
reported to be in the region of £800m. Racal and Energis
had announced that they were in talks in September.
Chairman's swansong
Sir Ernest Harrison, chairman of Racal, said: "Looking to
the future, Racal will be in a much stronger position to
develop its portfolio of valuable businesses to maximise
shareholder value."
The company has long been planning to sell off its
telecoms business, either through a flotation or trade
sale.
The deal will be regarded as part of 73-year-old Sir
Ernest's swansong. He has been chairman and chief
executive of the group since 1966 and is expected to
retire next year.
Once completed, the sale will leave Racal to focus on its
defence electronics, industrial electronics and
transportation services.
Excluding the telecom business being sold, Racal
Electronics had sales of £926m, with an operating profit
of £95m, in the year to March 1999. In the same period,
Racal Telecom made an operating profit of £2.6m before
exceptional costs on sales of £199m. |
