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Takeover threat for Marconi
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July 8, 2001: 1:12 p.m. ET
Britain's beleaguered Marconi at risk of takeover
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LONDON (CNN) - Troubled UK telecoms equipment maker Marconi is braced for a possible takeover bid following its share price collapse, its chief executive has said.
George Simpson told the Sunday Business newspaper: "There are no talks with competitors at the present time... but with our share price where it is, we know we are vulnerable."
Lord Simpson spoke to newspapers after his designated successor, John
Mayo, was ousted on Friday after the company had suspended its share dealings and later issued a profit warning that more than halved the company's share price.
Simpson admitted that Marconi (MONI), one of Britain's largest
and oldest companies, had become a target.
He told the Sunday Telegraph: "Clearly we are aware of the opportunity/risk of a takeover.
"I think we are going to see consolidation and in the short term our scale is going to be smaller than these other guys."
Marconi's stock resumed trading in London Thursday as low as 115 pence after being suspended by the company Wednesday at 245 pence pending its later statement, a profit warning and announcement of job cuts, an action that angered investors.
"Marconi's communications to the markets over the last six months have
constantly disappointed," David Staples at debt rating agency Fitch told CNN.
Marconi's American Depositary Shares dropped 54 percent, or $3.80 to $3.23, in morning trading on the Nasdaq.
"Their handling of it was very poor and it fundamentally goes back to the fact that only a month ago they were talking about the European market still being a good market for them, with the U.S. being the problem, Staples added.
"Now we see that the European markets are also slowing."
Marconi ended a dramatic day Wednesday by announcing 4,000 more job cuts, a 15 percent drop in sales forecasts, and a 50 percent plunge in operating profit to March 2002 from the previous year's £702 million.
The profit warning slashed some £3.5 billion ($4.9 billion) from Marconi's market value, with 422 million shares changing hands, or about 15 percent of its total, according to Reuters data.
Simpson, 58, the former chief executive of GEC – renamed Marconi two years ago – told Sunday Business: "This is a horrible market... but we are big enough. We have sufficient value within the company to ensure there will be no distress sale.
"We are determined to restore value for our shareholders." 
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