European Community, Britain Investigating Hostile Bid for Plessey
Britain and the European Community launched separate monopoly inquiries Thursday into a hostile Anglo-German takeover bid for leading British electronics firm Plessey Co.
The bid, made in November by Siemens AG of West Germany and Britain’s General Electric Co. (GEC), is worth $3 billion (1.7 billion pounds) and, if successful, would create one of Europe’s biggest electronics concerns.
Industry analysts said the investigations would give Lazard Bros., Plessey’s merchant bankers, more time to carry on with efforts to form an international consortium to launch a counter-bid for GEC.
After the probes were announced, GEC, Britain’s leading manufacturing firm, and Siemens, the world’s fourth-largest electronics firm, bought Plessey shares in London, lifting their stake to 14.9% from just over 1%.
Britain’s Conservative government has said GEC and Siemens could hold no more than 15% of Plessey until the investigation by the Monopolies and Mergers Commission is completed. The offer cannot be revived until the commission releases its findings, expected in three months.
EC Competition Commissioner Sir Leon Brittan, a former British government minister, also ordered a full investigation into the offer. EC rules outlaw agreements that prevent, restrict or distort competition, and the commission has power to thwart bids deemed undesirable.
An official at the EC commission in Brussels said GEC and Siemens had requested an exemption from the rules, saying industry would benefit from the deal.
Britain’s Trade and Industry Secretary Lord Young cited possible competition implications in the bid for Plessey, particularly in the areas of defense electronics and traffic control equipment. Similar reservations were cited in 1986, when the monopolies commission blocked a GEC bid for Plessey.
GEC made no immediate comment, but Siemens said in a statement in West Germany that the partners hoped to pursue the takeover after the probe.
A spokesman for British businessman Sir John Cuckney, who is involved with the efforts to form a consortium to take over GEC, said he would press on with the project.
The prospect of such an offer has sparked an outcry among British politicians of all parties worried about foreign control of GEC’s strategic power station and defense interests. A counter-bid, if made, is expected to be at least $10 billion (6 billion pounds), a record in British takeover history.
The Office of Fair Trading, a British state agency which makes recommendations to the monopolies body, said earlier this week that it was studying the implications of a bid for GEC.
