Thomson interested in whole of Racal

Racal Electronics this week confirmed that French defence electronics giant Thomson-CSF has approached it to discuss a possible bid for the whole company.

Insiders say a bid could come as early as this week. Senior Thomson-CSF personnel were meeting in Paris this week to discuss the approach. Thomson had not made a statement about a possible bid as The Engineer went to press.

Any bid offer is likely to be an agreed one, with the only sticking point being the price. City analysts value Racal Electronics at around £2bn.

Thomson-CSF’s interest in acquiring Racal’s defence arm has been known since last September, but its interest in the whole of the company comes as a surprise.

A strategic review of the future of Racal’s defence arm was ordered last November, following the sale of its telecoms interests. The defence rethink is part of a drive to sell off what are seen as `non-core’ businesses.

A Racal spokesman said the review had not settled on a recommendation for a sale and there were many other options before the firm. These could include either a sale of just the defence arm, or a merger within the context of the general European drive towards defence industry consolidation, to counter competition from US defence giants.

Thomson-CSF already has substantial defence interests in the UK. It has a 50.1% stake in the Thomson Marconi Sonar joint venture, and 50% holdings in Pilkington Optronics – which makes periscopes – and Shorts Missile Systems, which makes short-range anti-aircraft missiles.

The French firm also owns Thomson Training and Simulation in Crawley, Sussex, and has a London-based holding company, Thomson-CSF Holdings, for its UK interests.