Struggling Marconi likely to be acquired by Swedish Ericsson |
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Published
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Mon, 10 Oct 2005 11:05
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LONDON: Struggling telecoms equipment maker Marconi is slated for a takeover by Swedish rival Ericsson who are believed to have come up with the highest bid of over £700m.
In August, the company had announced it was in discussions with third parties for a possible merger without revealing who the ‘third parties’ were. Among the suitors were Chinese group Huawei who were at the time expected to win the deal.
The talks and a preceding distribution deal awarded to the Chinese firm had sparked off a debate among MPs who pressed for government intervention in the deal. They believed Huawei to be closely associated with the Chinese government.
Marconi had nearly collapsed in 2001 after the firm spent around £4bn in acquiring some US internet firms and sold its defense business. In May this year, it once again took a knock after losing a crucial £10 billion BT contract despite its long association with it. Subsequent to losing that contract, Marconi had announced about 800 job cuts and also that it was now looking at options for a ‘business combination’. The Chinese firm Huawei had been awarded two thirds of the contract. Ericsson too had won a slice of the deal. The order was for the supply of equipment to control the transmission of VoIP calls.
The Swedish firm is believed to be more interested in Marconi’s biggest customer BT as well as its technological know-how.
If the Ericsson-Marconi deal comes through, analysts expect the Swedish firm to retain 80 percent of Marconi’s business and float the remainder – a US data networking company, on the Aim market.
Meanwhile, a spokesperson for Ericsson rubbished the talks of a takeover as another rumour saying that if the company did anything which had implications for the stock market, they would announce it.
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Sales at Marconi slip and amplify losses 