Racal Electronics plc was once the third-largest British electronics firm. Listed on the London Stock Exchange and once a constituent of the FTSE 100 Index, Racal was a diversified company, offering products including: as voice and data recorders; point of sale terminals; laboratory instruments; military electronics, including radio and radar. At its height, it operated throughout 110 countries world-wide and employed over 30,000 people. It was the parent company of Vodafone, before the mobile telephony provider was sold in 1991. Racal was purchased by Thomson-CSF (now Thales Group) in 2000, thereby giving the French firm access to the lucrative UK defence and armaments market.

Foundation[link]

Racal was created in 1950 as Racal Ltd, the name being derived from the partners RAymond Brown and George CALder Cunningham.^[1] Ernest Harrison joined the company as employee number 13 as an accountant,^[2][3][4] but later held the positions of chief buyer, personnel director and contract negotiator. The first factory was located in Isleworth, west London. On outgrowing this site it moved to Bracknell, Berkshire in 1954, enticed by a 99 year lease at four shillings and sixpence per square foot - and no rent reviews.^[5]

Although Racal had won a Royal Navy contract to build and supply a variant of the American Collins Model 51-J Radio Receiver, they were not granted a licence to build these sets by Collins Inc. This meant that Racal had to design and build a radio receiver from scratch. After almost bankrupting the company thanks to a £40,000 overspend,^[5] the result was the 'RA17' - in production from 1955 to at least 1973 - designed in cooperation with Dr. Trevor Wadley and utilising his famed Wadley Loop circuit.^[6]

Racal under Harrison[link]

Harrison joined the company board in 1958, and as deputy managing director from 1961 helped Racal to obtain a Stock Market listing.^[3] Harrison became chairman in 1966, when co-founder Ray Brown was lured away by the Ministry of Defence.^[3] The major deals he undertook were:^[2]

• Negotiation of a British Army battlefield radio contract (initially Larkspur, later part of Clansman) which secured the future of Racal
• Led the merger between Racal and British Communications Corporation, that bolstered Racal’s radio business
• Bought Decca in 1980 in competition from General Electric Company plc, the rival British company led by Lord Weinstock
• Buying the British Rail Telecommunications network, to form the basis of Racal Telecom
• Creation and spin-out of Vodafone
• Stopping the proposed takeover by Williams Holdings by demerging Chubb
• Investing in National Lottery company Camelot Group
• Selling Racal Telecom to Global Crossing
• Selling Racal's remaining defence and industrial electronics divisions to Thomson-CSF of France for £1.8 billion

Under Harrsion, £1,000 invested in Racal in 1961 would have been worth £14.5million when he retired in 2000. Harrison received an estimated £25 million from the sale of Racal in 2000, and is estimated to have died with an accumulated total wealth of £40million.^[3]

Decca Radar[link]

In 1979, Racal bought Decca Radar forming Racal-Decca. Racal-Datacom conducted business in the United States.^[7]

Vodafone[link]

In 1980, Harrison agreed a deal with Lord Weinstock of General Electric Company plc to allow Racal to access some of GE's tactical battlefield radio technology. Briefing the head of Racal's military radio division Gerry Whent to drive the company into commercial mobile radio, Whent visited GE's factory in Virginia, USA in 1980.^[8]

In 1982, Racal's newly formed subsidiary Racal Strategic Radio Ltd under CEO Whent, won one of two UK cellular telephone network licences; the other going to British Telecom^[9][10] The network, known as Racal Vodafone was 80% owned by Racal, with Millicom with 15%, and the Hambros Technology Trust 5% respectively. Vodafone was launched on 1 January 1985.^[11] Racal Strategic Radio was renamed Racal Telecommunications Group Limited in 1985.^[10] On 29 December 1986, Racal Electronics bought out the minority shareholders of Vodafone for GB£110 million.^[12]

In 1988, 20% of Racal Telecom was floated on the London Stock Exchange.^[13] This would lead to the situation where Racal Electronics was valued at less than its shareholding in Racal Telecom. Harrison demerged Racal Telecom in October 1991, forcing a positive valuation on the rest of Racal (colloquially known in the City as "the rump"). Vodafone would later become the largest mobile network in the world and the highest valued company on the FTSE 100. Immediately following the demerger, Williams Holdings launched a takeover bid for Racal. The bid, valued at £740m, failed.^[14]

Chubb Security[link]

In 1984, Racal bought Chubb, a security company that manufactured safes and locks. In 1992, Chubb was demerged from Racal^[15] and was subsequently taken over by Willams Holdings in 1997 for £1.3bn.

Racal Telecoms[link]

Racal re-established a telecoms division with a major government contract in 1988 and the acquisition of British Rail Telecommunications in 1995.^[16] This division of the former nationalised industry owned telecoms infrastructure laid across the rail network.

National Lottery[link]

In 1994, Camelot Group won the franchise to operate the UK National Lottery, Racal had a 22.5% share. After one of the founder shareholders, GTECH, was bought out by Camelot this stake increased to 26.67% which Thales continues to hold.^[17]

Break-up[link]

In 1995 Racal expanded its defence businesses with the acquisition of the Thorn Sensors Group from Thorn EMI.^[18] In 1998 all of Racal defence businesses were reorganised under Racal Defence Electronics Ltd into Racal Radar Defence Systems, Racal Radio and Racal Thorn.

In October 1999 Racal decided to sell its telecoms business to the American communications group, Global Crossing, for £1bn.^[19]

Then in January 2000 Thomson-CSF announced a bid for the Company: Racal became Thomson-CSF Racal plc and later part of Thales plc with the renaming of the larger Thomson-CSF to Thales Group.^[20]

In December 2008, Racal Acoustics Ltd was acquired by Esterline Technologies, and has become part of their Communications Systems platform.

References [link]

External links [link]

• Thales Group website
• Thales UK website