There have long been expectations that General Electric Co would soon seek a buyer for its General Electric Information Services business, and that if it did put it on the block, British Telecommunications Plc would be front of the queue of potential buyers, but late yesterday the British phone company sprang a major surprise by announcing that it had agreement to buy one of the major international competitors of GEIS, McDonnell Douglas Co’s network systems and network applications business. Heading the properties that will be acquired is the Tymnet worldwide packet switching and computer services business, which takes in the Tymnet Engine communications processor manufacturing business and the private network-building operations and services. Also in the agreement is the OnTyme electronic mail service, which is currently a competitor for Telecom’s existing Dialcom business but will now be integrated with it. Telecom gets the Card Services processing business, McDonnell’s EDI*Net electronic data interchange business, and Tymnet’s 25% stake in the Network Information Service Co Ltd business in Japan. The price to be paid is expected to be $355m, and is subject to a full purchase investigation and the usual regulatory clearances. The businesses to be acquired are profitable as a group, and annual turnover is running at $250m a year. Tymnet, which was acquired by McDonnell Douglas at the turn of the decade, is second to US Sprint’s Telenet in packet nets in the US, and EDI*Net is number one in US data interchange. British Telecom’s move puts pressure on rival Cable & Wireless Plc to make a similar acquisition.
