3i acquires Marconi division

3i has become the first private equity firm to participate in Marconi’s sell-off programme with the acquisition of its Applied Technologies Division.

European private equity investor 3i has acquired the Applied Technologies division of beleaguered electronics-cum-telecoms manufacturer Marconi in a £57m transaction.

The sale by Marconi is the latest in a series of disposals by the firm which is still attempting to stave off financial collapse after the firm’s unsuccessful move into advanced telecommunications in the late 1990s. The disposal brings the total revenues recouped by the firm to £1.6bn.

The transaction value of £57m includes a vendor loan note of £7m. The acquired business, which comprises assets in the UK, US, Germany and France, will be renamed E2V Technologies. The company employs over 1,350 people worldwide, primarily in the UK. Debt funding for the deal has been provided by the Bank of Scotland Corporate Banking.

The acquisition is likely to be the first in a series of such deals this summer made by distressed sellers in the light of continuing poor performance. This is particularly the case in the telecoms and technology sectors where firms are dealing with massive debt piles.

For example, private equity firms Apax, Carlyle Group and CSFB are currently in talks to acquire UK telecoms operator Energis for E550m. The major stumbling block for the Energis deal remains the level of debt that will be inherited by the prospective buyers. Energis is currently in debt to the tune of £690m, a figure which private equity firms want to reduce by £290m prior to completing a £550m deal. However, bankers for Energis are considering a proposal to cancel the sale in favour of a £150m capital injection into the firm.