Kevin O'Toole/LONDON
GEC managing director Lord Simpson has outlined ambitions for a multi-billion-dollar acquisition spend in the US defence industry, effectively ruling out prospects that the UK group could wait for opportunities to emerge from French restructuring.
GEC now has some £5 billion ($8.3 billion) at its disposal for acquisitions, including £1.2 billion in free cash, and could increase that through further borrowing.
Speaking as GEC revealed a strong set of results for its 1997/8 financial year, Simpson promised that the cash would be used to build up its three core businesses, including defence electronics, now branded as the Marconi Electronic Systems division. Simpson confirmed that he has written to the chairmen of Lockheed Martin and Northrop Grumman offering to step in to help ease the path to their pending merger, which has run into US Government opposition on competition grounds.
The US groups have been told that they would have to strip out about $4 billion of defence electronics businesses to secure approval for the merger, but they are fighting the ruling through the US courts.
GEC says any deal is still "firmly in their court", but it is positioned to pick up businesses that could fall out if the merger takes place. Lockheed Martin was similarly obliged to spin off Loral's space business to see the deal through.
GEC points out that it has a long-standing presence in the US defence industry, and that its position was strengthened by the $1.4 billion acquisition of Tracor, completed late last month.
Simpson plays down the likelihood of joining the French restructuring, saying that it is still an option but with long odds. Little contact has taken place with Thomson-CSF since the French group started restructuring, he says. GEC's proposed alliance with Italy's Alenia Difesa will have sales of about £1 billion.
Source: Flight International
