In the first of an inevitable series of counter-attacks, Racal Electronics Plc chairman Sir Ernest Harrison convened a meeting yesterday to outline his company’s objections to New York-based Millicom Inc’s demerger proposals. Describing as totally unacceptable the 5% stake-holders’ suggestion that almost all the Vodafone shares be distributed amongst existing Racal shareholders, Sir Ernest argued that a move of the Millicom kind would simply result in a drop in the total share value. Nor, he added would it release the funds that the company is seeking to raise, via the proposed 20% to 25% flotation, for greater invest ment in its security and data communications arms – after all, as an investor in Racal Electronics, Millicom will benefit as much as any other shareholder in any moves to expand the Racal group businesses. Millicom seems to be standing pretty much alone, because the financial institutions which represent the majority of Racal’s shareholders are expected to reject the Millicom proposal, and will be encouraged to do so at the extraordinary general flotation meeting, which is due to be held on August 16.
