We first canvassed the possibility that GEC Plc might demerge its Marconi avionics and defence electronics business back in July (CI No 485), and the suggestion has returned with renewed force this week. According to the Mail on Sunday, GEC is considering flotation of 60% of the equity in Marconi, and suggests that the business on its own might be worth $2,000m against a current market capitalisation for the whole of GEC of only just over UKP5,000m. The flotation would add more than UKP1,000m to GEC’s cash mountain, already standing at over UKP1,500m – and GEC has promised that it will spend a large part of its cash on one or more acquisitions, if only it can find the right targets. As we said in July, a key benefit of a free-standing Marconi in which GEC was only a minority shareholder is that it would be only comparable in size to the likes of STC, Plessey and Racal, and only about twice the size of Ferranti, making it much less daunting as a merger partner for any of them.
