Background: GEC acquisition of Plessey and GPT (1986–1998)
The evolution of Marconi Communications began in 1986, when the General Electric Company (GEC) attempted a takeover of Plessey, a British-based international electronics, defence and telecommunications company founded in 1917. The takeover bid was barred by regulatory authorities. As an amicable solution, GEC and Plessey merged their telecommunications businesses on 1 April 1988 as GEC Plessey Telecommunications (GPT). GPT was a world leader in many fields, for example synchronous digital hierarchy technology, and this brought together the two companies responsible for developing and building the System X telephone exchange, which was supposed to make selling System X simpler.[1][2]
In 1989, GEC and the German conglomerate Siemens AG acquired the Plessey Company through their joint holding company, GEC Siemens plc. While most of Plessey's assets were divided between the companies (see: ), GPT remained a joint venture, with a 60/40 shareholding by GEC and Siemens, respectively. GEC Plessey Telecommunications was renamed to "GPT", which would continue to exist merely as a legal entity.
During the mid-1990s, the name GPT gradually disappeared in the UK. By October 1997, the joint venture, through a series of Siemens mergers and acquisitions in the UK, evolved into Siemens GEC Communication Systems, which in 1998 merged with Siemens Business Communication Systems to form the largest division of Siemens AG: Siemens Communications.
In August 1998, GEC acquired Siemens' 40% stake in GPT (at this point only existing as a legal entity) in exchange for £700 million, after which it merged GPT with the telecoms units of its other subsidiaries – Marconi SpA, GEC Hong Kong, and ATC South Africa – to form Marconi Communications.[3][4]
Marconi Communications (1999–2003)
In December 1999, GEC's defence arm, Marconi Electronic Systems, was sold to British Aerospace, forming BAE Systems. The remainder of GEC was renamed Marconi, and Marconi Communications became its principal subsidiary.
Following the announcement of the Marconi Electronic Systems demerger on 19 January 1999, GEC focused on the booming telecoms sector. It purchased two American equipment-makers to complement its existing telecommunications businesses: RELTEC Corporation (March 1999) and FORE Systems (April 1999).[5][6] Both acquisitions occurred during the peak of the dot-com bubble. The £2.8 billion price for FORE Systems and the £1.3n spent on RELTEC took a heavy toll on Marconi following the bursting of the bubble in 2000/2001; particularly as both companies were loss-making and had less than £300 million in assets between them.[7][8]
Marconi Corporation (2003–2005)
On 19 May 2003, Marconi underwent a major restructuring, being rebranded as Marconi Corporation around this time. Through a debt-for-equity swap, the firm's creditors received 99.5 percent of the new company's shares, while Marconi shareholders received one Marconi Corporation share for every 559 Marconi shares.
In July 2003, Marconi sold 32 percent of its stake in Easynet for £40.5 million and, during September 2003, the firm sold its remaining 40 percent stake in exchange for £56.7 million, in order to reduce Marconi's debts and increase liquidity.[23][24] In October 2003, the company announced that it intended to pursue listing on the Nasdaq.[25]
The company was a major supplier of asynchronous transfer mode, gigabit Ethernet, and Internet Protocol products. As such, it was viewed as a strong candidate to receive work on BT's 21st Century Network (21CN) programme; prior to the announcement of the winners of contracts, analyst Dresdner Kleinwort Wasserstein stated that: "[Marconi is] so advanced with its products and so entrenched with BT Group that its selection looks certain."[26]
