Sell-off rumours abound as Racal chief resigns

NEWS Racal Electronics CEO, David Elsbury, is to step down at the end of the year, prompting speculation that the firm may be ripe for acquisition. The announcement, made at the company's annual general meeting (AGM), was followed by analyst claims that it could be swallowed up by bigger rivals such as British Aerospace or GEC Marconi. The spin-off of Racal's telecoms arm is also looking uncertain, with the company saying it is likely to favour a sell-off rather than a flotation. At the AGM, Racal chairman, Ernest Harrison, said the reorganisation and repositioning of Racal Telecom is going well, with benefits expected in the second half of the year. But, he added, although it will continue to work towards a flotation, "If an offer were received from another company which we believe would create greater shareholder value earlier than through a flotation, then it would be considered." Susen Sarkar, senior analyst at the Yankee Group, said Racal's telecoms arm is a desirable asset. "A lot of companies have been taking an interest in Racal Telecom because it owns the old British Rail telecoms network." Sarkar added that it is not surprising that Racal is considering a sell-off. "It has a history of starting up divisions and selling them off. Its intention has been to sell off Racal Telecom if it had a good offer for some time now, because telecoms is not its core business," Sarkar explained. Elsbury has worked for Racal for 43 years, holding the post of CEO for the last seven years. The search for his replacement will begin immediately.