TELECOM GIANTS IN UK TO FORM JOINT VENTURE

TELECOM GIANTS IN UK TO FORM JOINT VENTURE

Two of Britain's biggest electronics companies, General Electric Co. PLC and the Plessey Co., announced long-expected plans Monday to merge their telecommunications interests to create a new, more competitive company.

The two groups have spent almost six months planning the new venture, which with annual sales of almost 1.2 billion ($2.1 billion) will lead the British market in the manufacture of telephone networks and other communications.Called GEC Plessey Telecommunications, the new company will include System X, the flagship digital public exchange jointly developed by GEC and Plessey. It also will include Plessey's Stromberg-Carlson Corp. subsidiary, the Lake Mary, Fla.-based exchange.

The businesses being merged had combined net assets last year of 428 million (US$758 million) and earned profits of 160 million (US$283 million).

Internationally, GEC Plessey will rank sixth in sales among telecommunicatio ns equipment manufacturers.

The merger, to be launched formally April 1, still needs the approval of Plessey shareholders because the assets being merged generate more than 50 percent of that company's revenue. Shareholders were sent a circular about the proposal Monday and will vote at a special meeting March 25.

GEC also will pay about 45 million (US$80 million) to Plessey because the interests it is transferring to the new company are worth less than Plessey's contribution.

The merger is likely to force some manufacturing plants to close, because both companies have facilities working on System X.

GEC and Plessey haven't always had a history of happy relations, particularly in 1986 whenGEC made a hostile and unsuccessful bid to take over its former rival.