Deutsche Telekom and Telecom Italia look to have dropped out of the running for Racal’s telecommunications business. Both European carriers had examined the business with regard to making a provisional offer before last month’s initial deadline for bids, but both have backed away. AT&T Corp, often linked with possible acquisitions in the UK market, is also thought to have decided not to make an offer despite an initial interest. Racal Telecom is one of the UK’s largest networks, consisting off 5,700km of optical fiber and 7,000km of copper wire. It includes the old British Rail telecommunications operation, which runs alongside railway tracks, which Racal bought for ú130m in 1995. Deutsche was thought to be considering buying a 60% stake in Racal Telecom, leaving Racal with the remaining 40%. There is now just one confirmed contender in the running – Duncan Lewis, the former senior Granada executive, backed by Schroder Ventures. His bid is thought to be worth around ú450m for all of the business. In June, Racal appointed Merrill Lynch to search for partners for the telecoms business, though Racal has not ruled out a sale of the whole division.
