Put the rump on the stump

25 October 2005 By Robert Cyran Follow @rob_cyran

The UK telecoms equipment maker has sold off most of its business for £1.2bn, leaving its pension fund and a small IT services group. Marconi has fetched a good price. And it can still recover more value from selling the fund or its remaining business.

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Ericsson has agreed to pay £1.2bn in cash for the majority of Marconi's business. The Swedish telecom equipment maker will acquire Marconi's name, its optical networks, most of its Access Networks business, its Data Networks business, and other small businesses. These account for about 75% of Marconi's sales.

Marconi will retain its UK and German telecommunication services businesses, the group's £275m in cash, and the group's pension fund. It will change its name to Telent and return £577m to shareholders, which is equivalent to 275p per share. It will also inject £185m and put £490m in escrow for its pension fund. Another £100m will be retained for restructuring and tax costs and £123m will be retained for working capital.

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