Meanwhile Racal Electronics Plc has been successful in its bid for British Rail Telecommunications Ltd and its 17,000-mile trunk network (see front), fighting off competition from around 30 other companies. Shares in Racal rose 7.5p to 277.5p at the news of the deal. Racal will pay a total of ú132m for the company, to be financed by new borrowing. BRT will become a separate subsidiary company within the Racal Network Services group. Racal says it expects BRT to be earnings enhancing in the current financial year. For the year ended 31 March 1995, BRT reported a turnover of ú174.2m and profit before tax of ú17.6m. According to Racal chief executive David Elsbury, the company had identified transport as a major growth area three years ago. While 80% of BRT’s revenues come from rail companies, only 20% of capacity is actually used, he said, creating opportunities to resell spare capacity to other operators. Deals with Nynex Corp and AT&T Corp are believed to be in the pipeline. BRT, which has around 2,800 staff nationwide, has exclusive contracts with the various rail companies extending for from between five and seven years. Apart from these, it has around ú6m of business from the coal industry, London Docklands, Mercury Communications Ltd and Vodafone Group Plc. In addition, said Elsbury, the takeover of BRT will improve Racal’s chances of winning other major contracts: he said the company had previously been unsuccessful with bids for the police national network and National Westminster Bank Plc’s network on the grounds that it was too small. Because of the size of the acquisition, it is conditional on the approval of shareholders at an extraordinary general meeting that is to be held on December 21.
