Mergers & acquisitions

Marconi Talks on Takeover Talks

A deal pairing up Huawei Technologies Co. Ltd. and Marconi Corp. plc (Nasdaq: MRCIY; London: MONI) looks more likely than ever, given what Marconi announced today and what Light Reading reported last week.

In a statement released to the London Stock Exchange today, Marconi said it has indeed been involved in M&A discussions, part of its plan to "pursue all strategic options with the objective of maximising shareholder value." The rest of the statement reads as follows:
These options include, amongst a range of alternatives, discussions with third parties about potential business combinations. The discussions are at a preliminary stage and there can be no assurance that an offer will ultimately take place.

. A spokesman for Marconi declined to reveal the identity of these "third parties."

didn't mention Huawei as the party to whom it had talked, but several sources say the combination makes perfect sense and has analyst support (see Could Huawei Buy Marconi?). If it made a move soon, Huawei could get Marconi at a knockdown price and bring with it a number of European carrier accounts, a key goal in its own international expansion strategy (see Huawei Plans to Triple Euro Business). Both vendors have a link to BT that can't be ignored. After being named as a primary supplier in BT's access and transmission categories, Huawei needs a strong services and support team to back up its 21CN success -- and needs it fast. BT has an aggressive project timetable, as it wants to switch off its current voice and data networks in 2010.

Marconi has more experience with BT's current networks and culture than any other supplier and has an extensive support contract with BT (see BT Renews $656M Marconi Deal). And, after being bested by Huawei in BT's 21CN, Marconi is now figuring out how to live without a huge chunk of revenues (see Marconi in Turmoil and Marconi to Cut 800 Jobs).

As reported by Light Reading on Friday, one way Marconi will live without those big BT revenues is to slim down further -- an activity that will no doubt make it even more attractive as an acquisition target (see Marconi: M&A Moves Next?).

A Light Reading source says Marconi has asked a telecom M&A specialist, Daniels & Associates, to find a buyer for its wireless network planning and optimization business, which has just announced a new customer (see Marconi Optimizes Orascom).

That unit has its revenues included in the "access products" revenue line that totaled £32 million (US$56.9 million) in sales in the most recent quarter (see Marconi Reports Q1 Loss). Marconi, as of Friday, wouldn't comment on its M&A activity, though it did reveal that its wireless business unit currently employs just over 300 people, mostly in the Dallas area.

When contacted by Light Reading, Huawei declined to comment on what it called “market rumour and speculation.”

The London Sunday Times reported today that Huawei could splash out around £600 million ($1.07 billion) for Marconi, if a deal were reached.

Shares in Marconi had soared, relatively speaking, in Monday trading, climbing $1.42 (14.56%) to $11.17.

— Phil Harvey, News Editor, Light Reading, and Justin Springham, Senior Editor, Europe, Unstrung

qaman1 12/5/2012 | 3:06:13 AM
re: Marconi Talks on Takeover Talks I am going to get flamed for this, but I have to say it. When are the "all powerful" executives that "take all the risk" going to "stand and deliver" as they ask their subordinates to do? Let me say this in another way, if the Execs say "find me a way for the company to make a lot of money"(in a different wording, I would say) and the subordinate does, the Exec takes the bows, the money, demands more money and compensation for "their risks"... retires like a King/Queen (didnt want to forget Carly)... but when the "xxxx" hits the fan, oh gosh, lets find a way to maximize shareholder value (and get my next bonus, hire an attorney to make sure the board knows I have a clause in my contract that says even if i am the lousyiest person in the whole world, you are gonna pay me more than I am worth(...

The end of this rant is this... there once were two men of honor and integrity by the names of David Packard and Bill Hewlett. I had the honor of working for them at one time..and the reason I say it like that is that there were 4 feet high and twenty feet wide posters in the areas that said "Just call me Dave"...and he (and Bill) meant it... Men of integrity that didnt believe in layoffs, or cut the throats of those who work for them...it was "WE are taking a 10% cut in pay to make sure we can survive starting with me/us"...

Bill and Dave took the hits and backed away from the spotlights...and stood as Giants as they literally passed out paychecks to the people who worked for them, went to the picnics, and walked on the floors of the "common man" because they (Hewlett and Packard) respected the people who worked "with" them... It would be nice to see another man/woman who has that much courage again... but alas, Im a throw back who lives in a dream world and is on the road away from his family trying to make a living, sending it home and trying to see them as much as possible, because this economy has gone to the "wise Execs who take all the risks"...
uk_ian 12/5/2012 | 3:06:10 AM
re: Marconi Talks on Takeover Talks Here we go again.... Does anyone see a pattern forming here? Does anyone really believe that Huawei want anything to do with a struggling UK engineering company whilst is has a chunky pensions deficit and hefty redundancy liabilities?
Who wants to bet me a pint that in a few month's time Marconi doesn't dive into administration waiting for a Chinese rescue package that only materialises once the liabilities have been written off?
igmp 12/5/2012 | 3:05:56 AM
re: Marconi Talks on Takeover Talks The softwitch and radio produects, along with the service arm are well worth the investment, quite how some of Marconi's existing custmers in the govenmet/defence sector would react to a Chinese takeover an interesting point.
The compnany has already effectivly split itself into four units to prepare for sale or takeover.
I agree the issue of the pensions deficit will have to be resolved before any buyers get serious.
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