Arms firms eye Siemens Plessey

Germans put BAe and GEC on list of would-be buyers of profitable defence electronics operation

By George Paloczi-Horvath

British Aerospace and GEC have each been approached over the sale of Siemens Plessey, intended to be in new hands by September.

Germany’s Siemens has set the September deadline for offloading its defence interests including Siemens Plessey, preferably in one package, to coincide with the end of its financial year.

Other firms approached might include Thomson-CSF and Dasa, according to a Siemens Plessey source, who said US firms had also been contacted.

`Of the major US defence electronics companies, Northrop Grumman is the one that is by far in the greatest need of a major acquisition,’ said a UBS analyst.

Other analysts said ITT, Siemens Plessey’s potential partner in the British Army’s Bowman radio project, would be interested.

GEC is a strong favourite. It could swap its 60% stake in the £1.07bn GPT telecoms business – in which Siemens already has a 40% stake – for Siemens Plessey.

George Simpson, GEC’s managing director, is said to be favourable to the idea, but is expected to ask for extra cash from Siemens to top up the exchange.

Siemens Defence Electronics, Siemens Plessey’s parent company, has a £700-£750m turnover from activities in the UK, Germany, Belgium and Australia.

Orders were up 33% last year with sales increased by 27%, but this is still only a small percentage of Siemens’ £40bn turnover.

Siemens Plessey is profitable, with a two-year order book, though it declined to put a value on this. But the 2,500-strong company – most employed in the UK – is believed to have a turnover of £250m-£300m.

The Government is believed to be anxious to keep sensitive defence technology in Britain.

Separate negotiations for the sale of Siemens’ minority stake in its UK-based £100m civil air traffic management business – with Thomson-CSF as the buyer – `are at an advanced stage’.