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Thursday, July 2, 1998 Published at 08:30 GMT 09:30 UK

Business: The Company File

GEC unveils share shake up

GEC has plenty of cash to spend

GEC, the electronics and communications group, has pledged to buy back £358m worth of its own shares and said it would consider more stock purchases as it restructures its finances following a frenetic period of corporate activity which has transformed the business over the last few months.

GEC unveiled a rise in underlying profits to £1.08bn ( compared to £1.01bn last time) for the year to March as it announced the radical shake up of its share structure.

[ image: Lord Simpson is looking for another big deal]
Lord Simpson is looking for another big deal
The share restructuring comes on top of the £301m buy back GEC announced six months ago.

GEC's shares had jumped 18p to 542.5p by 11.40 BST (10.40 GMT) on news of the share buy back.

Lord Simpson, GEC's managing director, has embarked on an overhaul of the business since he began his tenure in 1996. In June GEC secured the $1.4bn acquisition of Tracor, a US defence electronics group.

That deal was closely followed by an agreement to buy out a 40% stake in GPT, a communications joint venture with Siemens, the German electronics giant.

GEC has also successfully floated Alstom, the transport and power systems joint venture with Alcatel of France.

Even after the share buy backs and the deal spree, GEC still has a large cash pile and is now believed to be looking for a new merger in the defence industry. Analysts believe Italy's Finmeccanica is among the favoured potential partners and British Aerospace has regularly been touted as a merger candidate.

However hopes of any immediate announcement were dashed when Lord Simpson indicated that the company's main priority was to digest the tumultuous changes that have the group has recently undergone.

GEC's profits came in at the top end of analysts' expectations of £1bn to £1.1bn.

GEC is paying a full year dividend of 11.43p a share.

There was no word on reports that GEC may change its name to Marconi, its best known subsidiary, after 98 years as a public quoted company.

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