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January 11, 1988

OPPOSITION TO GEC-PLESSEY TELECOMMUNICATIONS MERGER GROWS

By CBR Staff Writer

With two of the key constituents of Plessey’s contribution to the proposed GEC-Plessey Telecommunications Ltd joint venture digging their heels in and saying they don’t want to be included, and opposition growing to the idea of combining the Plessey and GEC Reliance PABX businesses, the merger in the form originally envisaged now looks to be in deep trouble. Plessey has spent a deal of time and patient effort in building Florida-based Stromberg Carlson into a viable and profitable competitor on the US market, and key personnel at that company are understood to be deeply averse to the idea of being included in the merged company. Stromberg would say only that it was preparing a statement yesterday. But its disinclination comes hard on the heels of a report in the Sunday Times that Racal Electronics is averse to its Orbitel pan-European digital cellular joint venture with Plessey going into the merged company. And the UK watchdog Office of Telecommunications is investigating on behalf of the rest of the UK industry the implications of GEC’s SLX PABXs and Plessey’s ISDX PABXs being sold by a single company which will have an overwhelmingly dominant position on the UK market. Formal merger of the two businesses was originally envisaged for January 1, but that target has been put back to April 1, and observers close to the talks think that June is more likely. And the obstacles to the merger, which seem to be growing rather than diminishing with time, could lead to the scope of the venture being scaled right back to include only the System X public telephone exchange manufacturing and sales businesses.

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