LONDON, ENGLAND - There is much speculation in London this month about the future of former telecom industry giant Marconi. Numerous sources are talking about ongoing discussions between Marconi and its Chinese business partner, Huawei Technologies (Shenzhen), that could result in Marconi being acquired by Huawei.
Huawei and Marconi entered into a reciprocal sales agreement in January 2005, but Marconi saw its share price plummet in April when it failed to land a critical (£10 billion) contract with British Telecom (BT), its largest customer (see OER, May 15, 2005). Huawei was chosen as one of BTs eight suppliers in that deal. Current discussions have Marconi valued at around £600 million, considerably less than the £1 billion valuation for the company before the BT announcement. It is also rumored that Huawei will use the Marconi purchase to get a London listing, and that the deal could be finalized in a few months.
This level of conjecture prompted an official comment from Marconi on August 8:
“As previously announced on May 3. 2005, Marconi Corporation plc is continuing to pursue all strategic options with the objective of maximizing shareholder value. These options include, amongt a range of alternatives, discussions with third parties about potential business combinations. The discussions are at a preliminary stage, and there can be no assurance that an offer will ultimately take place.”