Plessey sale adds pounds 137m to GEC war chest

GEC yesterday further strengthened its war chest by completing the disposal of its unwanted UK industrial businesses, with the sale of GEC Plessey Semiconductors to Mitel Corporation of Canada for pounds 137m.

The deal lifts GEC's disposal proceeds to more than pounds 300m and increased speculation that it is preparing for a big acquisition, possibly of a US defence electronics business.

GEC is set to raise a further pounds 1bn from the flotation of a 26 per cent stake in the power engineering and transport joint venture GEC Alsthom this June. It already has pounds 1.1bn of net cash even after paying out pounds 300m earlier this year on a share buy-back.

GPS had sales of pounds 215m and pre-tax profits of pounds 7.2m in the year to 31 March 1997 and employs about 2,000 staff at factories in Swindon, Plymouth and London.

In total GEC has now disposed of businesses with combined sales of pounds 1bn since Lord Simpson took over as managing director in September 1996.

Analysts speculated that GEC could be eyeing up a strike for Litton Industries of the US, which is valued at $2.8bn, ITT Industries, which is worth $3.8bn, or possibly even TRW which is valued at $6.6bn. However, GEC is also considering buying out Siemens' 40 per cent stake in the joint telecoms venture GPT.

GEC's shares ended up 3p at 384p.