Aerospace |
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When Tuesday finally came, GEC's focus became clear -- it would concentrate on forming a world force in defense, aerospace, industrial electronics and communications with GEC/Marconi, its defense arm. In essence, this announcement revealed that GEC/Marconi would become the new "heart" of the group. But later in the week came a bigger announcement -- a defense joint venture
between GEC and Italy's Finmeccanica Spa. With all the rapid consolidating going on in the US, it's no wonder GEC was expected to shatter the European Defense industry with mention of a merger. And the fact that former finance director David Newlands recently left forced analysts to think Simpson would automatically pursue a major merger or takeover. But this merger was not major. Once sealed later this year, GEC and Finmeccanica's defense arms will only gain 40 percent of one another's stakes. As a result of such small percentages, the merger is seen by some analysts as merely a "stepping stone" for Simpson. The good news? Under the joint venture, both companies will work on missile systems, naval systems, ground-based radar, command and control systems. And Finmeccanica's defense division, Alenia, will become a prime contractor in the powerful, four-nation, billion-dollar Eurofighter project. This means GEC could become a prime contractor rather than a supplier to Eurofighter. Even with $1.7 billion under its belt and one merger announcement, analysts have criticized GEC's inability to utilize what it has financially to succeed in making deals that would improve its global position. GEC is apparently in discussions with French partner Alcatel Alsthom Cie Generale d'Electricite over the future of the 50-50 rail and power venture, GEC-ALSTHOM. The company is also considering repositioning the telecoms venture with GPT whereby GEC owns 60 percent and Germany's Siemens AG owns 40 percent. Last week, GEC did say it was committed to spending its pile of cash -- valued at more than $3.4 billion -- on investment and acquisition opportunities. Who knows, maybe there will be more announcements to come. |
Last Monday, British
engineering giant General Electric Co Plc didn't know what managing director
George Simpson would announce in regard to the company's plan for the 21st
century. Rumors had spread that there would be a merger or a take-over.
Officials had even predicted a possible merger between its adversary, British
Aerospace Plc.
