Yesterday, GEC Siemens Plc came back with what it is calling its final offer for Plessey Co. Lord Weinstock feels that four years is quite long enough for all the companies and individuals involved and that there is no point in drawing out the agony. The offer of 270 pence per share is, according to Lord Weinstock, the maximum that GEC Siemens is prepared to pay and is the company’s estimate of what Plessey is worth. He added that GEC Siemens had a more conservative accounting system than Plessey but that the offer was nevertheless a generous one. This offer adds 45 pence more per Plessey share to that made in November (CI No 1,060). The increase does not, however, reflect any growth in Plessey’s value, but rather stems from the November bid not being intended as GEC Siemens last offer at that time. The undertakings to the Ministry of Defence were obviously not what GEC Siemens would have preferred and have led to a modification of its Europeanisation ideas. GEC last spoke to Plessey about 10 days ago to discuss GEC Plessey Telecommunications’s application for a Personal Communications Network licence, and to talk about defence electronics. No attempt was made to arrive at an agreed bid at that point. Lord Weinstock claimed that GPT’s application for PCN shows that attempts were and are being made to avoid acrimony. While Plessey will be held jointly by GEC and Siemens it will be run separately as a joint activity with its own management after the military communications, radar and PSD (anti-submarine warfare) subsidiaries have been transferred. The venture is described as joint with a 50/50 split in future funding for the running of the business and, in answer to the question would any external funding be necessary, Lord Weinstock commented drily that it would not and that it would be a happy change for Plessey not to have borrowings. Neither he nor Siemens’ Dr Baumans was prepared to say what percentage of the cash for the bid each company would offer except to add that Siemens will probably pay more than GEC. While Lord Weinstock admitted that some redundancies would be inevitable if the bid was successful, he disliked the term carve-up, suggesting that gentle restructuring was a more realistic description. He also said he would be surprised if Hoskyns decided it did not want to stay within the GEC-Siemens-Plessey grouping. As for his determination to acquire Plessey he said, grinning, that he was determined to the extent of UKP2,000m of folding money. If the bid is successful GEC’s shareholders may be less happy, since Lord Weinstock let slip that the effect on earnings per share may be negative in a year’s time. He hastily corrected this to the statement that there will be some dilution of earnings. – Katy Ring
