International Group Eyeing British Utility : Possible Bid by Outsiders Piques Ex-Defense Chief
Political opposition mounted Sunday to possible plans for an international consortium to bid for Britain’s flagship manufacturing firm, General Electric Co.
Financial analysts said any offer for GEC would have to top $10.6 billion U.S. (6 billion pounds), which could lead to the country’s largest takeover battle.
GEC employs 157,000 people, and its products range from domestic appliances to advanced defense radar and avionics for British missiles and tanks.
A surprise weekend announcement by a London investment house said a new company had been set up to formulate a proposal that could lead to an offer for GEC. The move sparked immediate calls for government intervention.
Lazard Bros. and Co. said the company, Metsun Ltd., was holding talks with a number of international industrial companies.
It did not name the companies, but newspapers said they included two British groups, Plessey Co. and STC; the French electronics firm Thomson CSF, and U.S.-based General Electric Co., which is not linked with GEC.
The companies declined comment pending a further announcement by Lazard.
Former Conservative Defense Minister Michael Heseltine said GEC was a national asset and that the government should block any attempts for it to pass from British control.
Heseltine resigned from the government in 1986 in a dispute over foreign control of the Westland helicopter company.
‘Bizarre Event’
A foreign takeover could change the face of two of Britain’s most important industries and affect thousands of jobs.
“It would be quite unthinkable for so over-simple a disregard of national interest to exist in any other significant capitalist economy. The Americans, the Japanese, the French or the Germans would blow the whistle before this bizarre event got out of control,” Heseltine said.
Opposition Labor Party spokesman Bryan Gould said the matter should be referred to the government’s watchdog Monopolies and Mergers Commission. Several unions called for government intervention.
Last year, GEC announced pretax profits of $1.2 billion (708 million pounds) on a turnover of $9.7 billion (5.5 billion pounds).
Britain’s biggest takeover to date was Anglo-Irish brewing giant Guinness’ $4.7-billion (2.7-billion-pound purchase of Scottish drinks group Distillers in 1986.
GEC has been criticized for a dull financial performance over the past few years.
Its reputation also suffered when the poor performance of GEC radar was blamed for the British government’s decision to cancel a $1.77-billion (1-billion-pound) deal for Nimrod early warning planes and for delays in its production of radar for the new Tornado fighter.
GEC Managing Director Lord Weinstock said of the possible bid, “We have to see the rabbit before we can shoot it.”
He said it would not affect a hostile $3-billion (1.7-billion pound) bid GEC and the West German electronics and engineering company Siemens made last November for Plessey.
After Lazard’s announcement, Barclays Bank confirmed that one of its non-executive board members, former Northern Ireland minister Lord Prior, was resigning because it was heading attempts to raise $6.1 billion (3.5 billion pounds) for Metsun’s likely bid.
Barclays is also the principal banker of Plessey, which fueled speculation that it could be involved in any bid.
