Marconi Electronic Systems (MES), or GEC-Marconi as it was until 1998, was the defence arm of The General Electric Company (GEC). It was demerged from GEC and acquired by British Aerospace (BAe) on November 30 1999 to form BAE Systems. GEC then renamed itself to Marconi plc.
MES exists today as BAE Systems Electronics Limited, a subsidiary of BAE, however the assets have been rearranged within that company. MES-related businesses include BAE Systems Submarines, BAE Systems Naval Ships, BAE Systems Insyte and SELEX Sensors and Airborne Systems.
Between 1945 and GEC's demerger of its defence business in 1999, the company became one of the world's most important defence contractors. GEC's major defence related acquisitions included Associated Electrical Industries in 1967, English Electric (including its Marconi subsidiary) in 1968, parts of Ferranti's defence business in 1990 and Vickers Shipbuilding and Engineering in 1995. In June 1998, MES acquired Tracor, a major American defence contractor, for $1.4bn.
Since October 1998, reports had been linking BAe with the German aerospace group DASA. GEC was even seen as a potential partner in a three-way merger with BAe and DASA.
In December 1998, reports emerged that GEC was seeking a partner for MES, the value of which was greatly increased by the Tracor acquisition. Prospective partners included Thomson-CSF (by 1998 on the path to privatisation) and various American defence contractors (e.g. Lockheed Martin and TRW). GEC had already been active in pursing consolidation in the defence business. In 1997 it made an ultimately unsuccessful proposal to the French government to the privatise Thomson-CSF and merge it with MES.
The prospect of a merger of UK companies soon became the most likely development. In mid January 1999, GEC and BAe confirmed they were holding talks and on January 19 it was announced that BAe was to acquire MES for £7.7bn ($12.75bn).
While MES was responsible for the majority of GEC's defence sales other GEC companies achieved defence related sales, principally GEC Alsthom, GEC-Plessey Telecommunications (GPT) and GEC Plessey Semiconductors.
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