Hisfather was a docker who worked for years under the notorious casual labourscheme and his mother, today still going strong at 93, supplemented thisprecarious income by making ties in a nearby "sweat shop" or, when Harrisonand his sister were young - at a sewing machine at home.
Harrison remembers the family "moving up market to Holloway and theneven more up market to Wood Green" where in 1942 he finished his grammarschool education at 16.
A bit of a tearaway when evacuated at the start of the war, he was movedfrom family to family until he came under the charge of one lady, who said: "If I sorted myself out I could be a foreman when I grew up."
His parents wanted their only son to have a secure career as acivil servant but after consulting his headmaster Harrison chose accountancy.Service as a Fleet Air Arm pilot in Canada towards the end of the war interruptedtraining but he came home in 1947 and qualified three years later.
I wanted to get into industry but was turned down for a job with SmithsIndustries in Cricklewood." he says. So he sought to broaden his experienceat Touche Ross.
Within a year the partners of his old firm were in touch. One of theirclients, a new consultancy founded by two ex-Plessey men, Ray Brown (laterSir Ray) and Calder Cunningham, was planning to move into manufacturing.It needed a qualified accountant to keep an eye on the costs. They offeredHarrison £650 a year to start.
That was 41 years ago. Today he earns more than £400,000 as chairmanand has made a £10 million personal fortune through his shares inRacal and Vodafone, the mobile phones company he demerged last year.
Few investors will resent his good fortune. He is Britain's high priestof shareholder value. Anyone who invested £1,000 in Racal when itwent public in 1961 and then supported the two subsequent rights issuesnow has shares worth more that £1 million and has received nearly£100,000 in dividends over the years.
Last year's demerger of Vodafone, sparked originally by a threatenedbid from Cable & Wireless, proved effective in unlocking shareholdervalue.
Now Harrison is preparing a repeat performance with the coming spin-offof Chubb Security. The demerger plan helped scotch last year's hostilebid from Williams Holdings.
Harrison enjoys his good fortune. He owns and breeds racehorses, andis a member of the Jockey Club. His best known horse, Cacoethes (Greekfor "itch"), came third in the Derby three years ago. He lives with hissecond wife, Janie, on an exotic 15-acre spread in Surrey. The house isbuilt in the style of a Spanish nobleman's hacienda.
He loves entertaining and the banqueting suite in his home can easilyaccommodate 70 guests. On winter Sundays the snooker room is the venuefor an endless series of grudge contests between Harrison and his partner,Sir Eric Parker of Trafalgar House, against former Touche Ross senior partnerMichael Blackburn and food broker Desmond Cracknell.
He is a fanatical gardener and the Harrison estate is rich in tropicalvegetation. He even grows bananas.
Despite the honours, the wealth and success, Harrison remains a typicalCockney: shrewd, tough and abrasive but generous of spirit - a type youmeet on every taxi rank, in every street market and on every football groundin London. If he were not busy with other commitments, his daughter, Deborah,who works on light entertainment programmes at the BBC, could probablyfix him up with a bit part in East Enders.
Adviser Sir Michael Richardson of Smith New Court, says: "He has notbeen spoilt by his achievements and remains an intensely likeable man.When the bid from Williams came out last year he looked like a loser atthe beginning. But his leadership turned the whole thing round. In anotherwar I would love to serve in his battalion."
Tom O'Connell of Guardian Royal Exchange, which has been a backer sincethe start, says: "What I particularly like is his openness. If he is doingwell he will tell you. If he is doing badly he will also tell you. He isa genuine industrialist, not an asset stripper and he is not afraid tospend money on technology where others only pay lip service to the idea."
Racal very nearly was not a success story. In the mid-1950's, it "nearlywent bust" spending £40,000 to iron out the bugs in its first proprietaryproduct a high frequency radio receiver.
Before then Racal had worked only as a subcontractor for the Governmentor for bigger companies such as Marconi.
It only survived, Harrison says, because the Government cancelled anorder from its own agency and switched to Racal. The gamble on new technologypaid off again and again in subsequent years.
Harrison is a sentimental man with vivid recollections of those earlyyears. Appropriately, our interview took place at the Bracknell officeto which Racal moved in 1954, enticed by a 99 year lease at four shillingsand sixpence per sq ft - and no rent reviews. The plain panelled room withits robust and unfashionable furniture can have altered little in the interveningyears.
"There were just 12 employees when I joined. I was lucky because RayBrown trained me in so many jobs. I was the accountant, personnel director,the chief buyer and I also negotiated contracts." he says.
At the time he was between marriages and often did a seven-day week.He once worked three days continuously without sleep, keeping himself awakeby chain smoking.
These days that astonishing stamina is applied as much to leisure asto business. It is said he once flew to Australia to watch a horse raceand then flew straight back in time to watch the Cup Final. He is a dedicatedArsenal fan.
In the early hothouse atmosphere at Racal, Harrison honed the ideashe was to put into practice as boss. "The reason that first radio was sosuccessful was because we were a small team working together," he says."All of us knew the product inside out. There was close supervision andthat critical factor - intensity of effort."
(This first radio Racal manufacturedwas the famous RA17 "Wadley High Frequency Radio Receiver" made under licenseto the South African Council for Scientific and Industrial Research - TheRA17 was based on a "prototype" developed in Pinetown Natal by SMD laterto become RACAL-SMD.)
As his business empire burgeoned Harrison strived to retain that smallcompany culture. "If development activity becomes too large it becomesdifficult to supervise," he says. "But if you assemble one team of engineersand give them just one product to work on they become one family. Do itthat way and it will come out near enough on time and to cost. Try to develope10 or 12 products at the same time and you can guarantee they will allrun late and over budget."
"That is really why small companies start. They live, eat andsleep the one product and when it comes out it is super."
As Racal evolved so more and more autonomous units were set up. Thatstructure enabled Harrison to respond quickly when new opportunities arose.Its logical out come should be yet more demergers from the mother shipin the years ahead.
When the cellular radio opportunity came in the early 1980's it wasprompted by a former worker whom Harrison had "let go" on generous termsand set up as a consultant.
At 66 he shows no inclination to retire. "I think he will go on andon because he enjoys himself so much," predicts Parker.
Whatever he decides, the reins of power are already being passed toothers. As at Vodafone, he will have no executive role at Chubb, and hehas groomed David Elsbury to succeed him at Racal.
At the top of the organisation is a spirit of brotherhood and loyaltyHarrison has fostered. When directors meet they invariably embrace in thecontinental manner.
Paradoxically Racal can never be a family company. The rule is no directors'children can join it. Two of Harrison's sons run their own companies anda third works for S G Warburg in Holland.
The rule begun by Ray Brown is good for the company and probably goodfor the children as well." he says. "It means everyone here knows theycan get to the top of the organisation. David Elsbury used to come to workon a pushbike and started here straight from the RAF as a tester on a productionline. What he has done anyone in Racal can do." Elsbury, incidentally,is another Racal millionaire.
Harrison is serious about business. He fixes you with penetrating eyesthe colour of Courage bitter as he re-runs the arguments in his defenceagainst Williams.
But humour is never far from the surface. When his veteran PR man, KenWard, invited him to a birthday party at his home, Harrison turned up withseveral hairy gatecrashers: the chimps from the Brooke Bond TV ads. Itwas an echo of an earlier zoological incident when Harrison had phonedWard in the middle of the night and addressed him with the immortal words:"Ken, find me an elephant."
Note : All as per the original article in the newspaper butthe " ETH Image" and "green highlighted" text was added by DVL.
Memorial Speech by Sir Ernest Harrison, OBE - 2 May 1996
There is a very old saying that life is what you make it - in otherwords the quality of life that we seek to enjoy, depends so very much uponourselves.
Douglas Morrell certainly made the most of his life.
After receiving his early education at Dauntsey's school in Wiltshire,Douglas moved to the Faraday House Electrical Engineering College in Londonwhere he
won a diploma of Faraday House with Honours, was a gold medallist andgained a Bachelor of Science - Engineering degree.
In 1938, by which time he had become an associate member of the Instituteof Electrical Engineers, he joined the Marconi Wireless Telegraph Co. asan installations engineer.
During WW2, he was responsible for the installation of direction findingequipment at both home and overseas stations. At the end of hostilitiesDouglas moved to Redifon as a sales engineer where he first met Ray Brown.
That meeting was to prove to be one of the most important in his life.
Ray Brown did in fact leave Redifon in 1948 to join Plessey where hemet Calder Cunningham, who had been the signals controller at British OverseasAirways Corporation.
In 1950 they left Plessey to form their own company, Racal.
The company was successful and grew. In 1953 Ray Brown asked Douglasto join Racal as their first sales manager, which he did in April of thatyear.
At that time sales were running at an annual rate of some £100,000and pre-tax profits less than a thousand.
But the company was now growing fast and in continual need of more capitaland Douglas made his first investment in Racal in the year 1954. In 1955he increased his investment and became a director of the parent board whichat that time bore the name of Racal Engineering Ltd.
In that same year an event of the greatest significance took place withinRacal.
Ray and Douglas knew that the British government and indeed, most othergovernment throughout the world needed to replace their high frequencygeneral purpose communications receivers which were of both pre-war andwar time vintage. An engineer by the name of Trevor Wadley, working forthe Council of Scientific and Industrial Research in Pretoria had inventedand patented unique circuitry which he had built into an H.F. receiver.
The result was a substatially improved performance over existing equipmentespecially in the ability to re-set.
A licence for exclusive use of this circuitry was offered firstly tothe British government, but they declined on the grounds that they werefunding their own development.
It was then offered to most of the major electronic companies in theU.K. but they all declined on the grounds that there as too much spuriousnoise which would be difficult to eliminate.
The team from South America led by Dr Frank Hewitt and the inventor,Trevor Wadley, were by this time very disillusioned, and in final desperation
consulted a lady by the name of Vera Purnell, who was editor of anofficial commonwealth publication. She knew Calder Cunningham and she recommendedthat they make contact with Racal.
They did and we talked. We examined the receiver and very naïvelyfelt confident that the spurious noise problem could be overcome.
Fortunately they did not insist on a down payment and Douglas negotiatedand signed an exclusive licence with them.
Racal was now entering a new phase.
For the first time we were undertaking the development of a major proprietaryproduct. A general purpose high frequency communications recevier namedthe RA17.
There was, however, one very big problem facing us. How do we financeit? The models supplied under the licence agreement were very much prototypes.
The cost of completing the development, especially the elimination ofspurious, the manufacture of 'B' models and the preparation of manufacturingdrawings was going to be high.
We had to raise more equity capital and a scheme was devised to achievethis. We had at that time some 10 shareholders all with differing financial
circumstances. Some were happy to make further investment but otherswere not in a position to do so and did not like the idea of dilution oftheir equity percentage.
It was the age old problem which confronts the founding shareholdersof young growth companies.
Do you want to maintain your equity percentage and remain a small company,or, are you prepared to accept a reduced equity percentage in a companywith increased financial resources sufficient to ensure substantial growth.
The debate went on, far too long, and we were unable to finalise theshare scheme for some time.
In the meantime we were pressing on with the development of the R.A.17and our liquid position was becoming extremely difficult.
One evening, Douglas and I went for a drink at the Downshire Arms inBracknell, and discussed the subject, as we often did. At the end of ourconversation, and being made aware of our financial difficulties and ofthe great importance to Racal of the success of the R.A.17 development,Douglas said to me, "in the morning I'll give you a cheque and you cantell me later what type of shares and how many I will get."
Here was Douglas putting the best interests of the company before personalgain.
He didn't have to do it - but he did - very few people would have donethat and no other shareholder did.
I cannot tell you how critical it was to receive that money and thereis no doubt in my mind that that wonderful gesture taken together withhis 29 years of magnificent service to the company made his contributionto the success of Racal as great as anyone's. Certainly no one has donemore.
The share scheme was eventually agreed and the necessary cash raisedbut the development of the RA17 took much longer and cost much more thanplanned. But Danny Webb, Geoff Meakes and many others, some here today,worked day and night, month after month, to succeed - and they did.
The RA17 entered production in 1957 - became an immediate success andset Racal on the path to becoming the world leader in radio communications,and Douglas had played such an important part.
The British government cancelled their development contract with anothermajor company and the RA17 became the standard H.F. receiver for all thearmed forces and monitoring agencies of the United Kingdom.
We recognized, hoever, that the export market was going to be a mostimportant factor in our future growth, and Douglas was given the resposibility:
The RA17 was sold to most countries including the U.S.A., and totalsales were in the order of 25,000.
It was Douglas's unquestionable integrity and enthusiasm that enabledRacal to forge those early critical relationships with overseas customers.It was
Douglas's pioneering work that firmly established the cornerstone ofRacal's export success. It was Douglas, together with Ken Ward, who organizedthe extremely successful series of RacalEx exhibitions in London to whichcustomers from around the world were flown to witness at first hand Racal'sproducts and capabilities.
From those early beginnings Racal now serves customers in 140 countriesand has won 21 Queen's Awards for Export Achievement.
Today the company's export track record is unrivalled in its sector- indeed in the field of radio communications, Racal, for many years, hasexported more equipment than all the other U.K. companies added together.
Douglas did a tremendous job for Racal.
In 1975, he was appointed deputy managing director, a position he helduntil his retirement from the main board in 1982. When he joined the companyin 1953, sales were some £100,000, and pre-tax profits just £700.When he retired in 1982, sales were £644 million, and pre-tax profits£102 million. When Racal obtained a quotation on the London StockExchange in 1961, the market capitalisation was £1.4 million. WhenDouglas retired, the market capitalisation was £1.4 billion, andan investment of £1,000 in 1961 was worth £500,000.
After his official retirement, he continued to have a close involvementthrough the group's various activities in Germany. Despite his big responsibilitieswith Racal, he always found time to serve the industry and the professionof which he was a very proud member. Indeed, he was elected a Fellow ofthe Institute of Electrical Engineers in 1962. He was for many years acouncil member of the Electronics Engineering Association and enjoyed thehonour of being its president in 1978. He was a council member of the Societyof British Aircraft Constructors. In 1982, Douglas was honoured by theQueen for his outstanding service to our country and became a companionmember of the most distinguished order of the British Empire [sic].
He had been clothed as a Member of the Worshipful Company of ScientificInstrument Makers in 1961, and retired from the court when the family movedto Münich in 1982. Had he not retired, he would almost certainly havebecome Master.
Douglas loved life and lived it to the full.
He had many interests and hobbies. In his earlier days he enjoyed enormouspleasure from sailing. He was extremely fond of music, opera and ballet.He constructed a miniature model railway and had a very interesting collectionof clocks.
Above all he loved parties. With Isa, he always supported the many Racalsocial function and I'm sure that we can all recall seeing Douglas lateat night sitting cross-legged on the floor - a glass in one hand and acigarette in the other.
On a personal note, Douglas was a dear friend of mine for 43 years.He was one of the nicest and kindest men you'll ever meet. We experiencedwonderful times and shared so many successes - above all else we had alot of fun. he always gave me unstinting support, and I shall always beindebted to him for so many things.
Douglas is going to be missed by so many, but especially of course byhis family: By Isa, who was by his side for 30 years and gave him greatlove, devotion and support. By his three sons, Raymond, Clive and Colin,and by his stepdaughter Marion who he regarded as his own.
All of his family have every reason to be so very proud of Douglas whoachieved so much and was loved, respected and admired by all who knew him.Certainly Douglas loved and was proud of all of you.
The likes of Douglas Morrell pass through this world so infrequently.He was a very special person - in the quiet of the evening we shall rememberDouglas as a wonderful man who put far more into life than he ever tookout.
SIR ERNEST HARRISON, OBE
CHAIRMAN OF THE BOARD OF DIRECTORS FOR RACAL ELECTRONICS PLC
2 MAY 1996
Hard work, hard play Harrison
By Judi Bevan - City Profile -Sunday 8 December 1996:
THEY do not make them like Sir Ernest Harrison any more. The docker'sson who still calls morning meetings at 7.30 am but hates anyone to leavehis parties before dawn, has created a work hard, play hard culture atRacal, Chubb and Vodafone which has endured the monochrome 1990s. A fiercepatriot who served in the Fleet Air Arm in 1944, Harrison may sell Racal'sdefence products around the world but he buys British, driving a Jaguarto his Bracknell, Berkshire, office and bringing out his Rolls-Royce onlyfor special occasions.
Well known in racing circles and a member of the Jockey Club, Harrisonowns four horses and has part shares in five others while Racal sponsorsthe Derby. Until last week shareholders had never begrudged him a day atthe races. After all, 1,000 invested in Racal in 1966, when he became chairman,would be worth 2.7m today if dividends had been reinvested and a useful411,000 if they had been spent.
But Racal's surprise warning last Monday, forecasting taxable profitsof no more than 50m against last year's 70m due to problems in the DataProducts division selling to the military, saw the share price drop 50pon the day and set fund managers muttering about Harrison's emotional attachmentto once-great businesses that now drag the company down. Perhaps, theysay, he should at last think about retiring.
In his 30 years at the top of Racal, which have included buying Deccafrom under Lord Weinstock's nose, demerging Vodafone and spinning off Chubb,Harrison has avoided most of the bear traps awaiting those entrepreneurswho create multi-million corporations from tiny beginnings. Even thoughhe is a passionate Arsenal supporter, he has resisted the lure of buyinginto a football club. He has kept his loafer-shod feet firmly on the groundand while he loves to push the boat out at his Tilford Hacienda in Surrey,he has never become grandiose or kidded himself he was building a dynasty.
He made sure his five children stayed out of the business. "We agreedthat anyone in the company should feel they can make it to the top," hesays. "Nepotism is bad for companies and bad for the children." But everyonehas a weak spot and it seems that like Lords Hanson and Weinstock, Harrisonis finding relinquishing control of the company he created the toughestchallenge yet.
Four years ago he bowed to Cadburial pressure and made David Elsbury,who joined Racal as a tester in 1954, chief executive. But although Harrison's70th birthday passed in May - notably without the expected lavish celebration- he remains an active executive chairman. Elsbury says it is a rare daywhen he and Harrison do not speak. "If there is a problem we always meetfirst so we can present a united voice to the board."
Harrison sits expectantly on a plump sofa in his suite at the Dorchester,back straight, hands planted firmly on his knees. So just what are hisplans for the future? I inquire. A grin lights up his face at the inevitabilityof the question. "There has got to come a time when I retire, that's afact," he says, sounding remarkably relaxed. "But these subjects are debatedby the nomination committee, the main board, and subsidiary boards. Thenomination committee met six months ago and discussed succession and wewill meet again in another few months." I note the "we".
Tanned from a break in Barbados, Harrison looks the picture of healthand although his hair is white he could pass for early 60s. His capacityfor large quantities of hard liquor is legendary, but he has stayed lean,swimming regularly in his pool, and his small, dark eyes, hard as bullets,are bright with intelligence.
He is dressed expensively in a black shadow-stripe suit, a white shirtwith long curved cuffs showing off gold lozenge links, a navy and goldtie and silk pocket hanky. Although his manner is mild, he has the lookof a man who could summon a dozen heavies with a snap of his fingers.
His business reputation is of Midas meets Houdini and anyone who hopeshe will quit while Racal is in trouble is likely to hope in vain. Whenhe finally leaves the company he joined in 1951, he intends it to be intriumph. "I am looking forward to being here certainly next year to enjoyData Products' success because that has been a very difficult businessfor us. And I want to see this licked into shape. I want good news."
Harrison was born in Hackney in 1926 on May 11 under the sign of Tauruslike that other great deal-maker and lover of thoroughbreds, the late SirGordon White. His father was a docker who under the casual labour schemewould pay his own fare to the docks in the hope of work. On average hegot work two or three days a week. His mother, Gertrude, who died onlylast year at 96, made ties to boost the family income which allowed Harrisonto stay at school. From Hackney the family moved to Holloway and then WoodGreen where Harrison attended Trinity Grammar. But when the war startedTrinity moved to the Essex village of Hatfield Peverel and a lively 13-yearold Harrison was billeted on four families before finding happiness withthe fifth. "I didn't always come home at the right time," he admits. Butthe last couple had a son in the army "and knew what to expect from a teenager".
Being sent away from home helped him grow up fast. "I call it my university,"he says. At school he had a natural gift for maths, matriculating withdistinction in arithmetic, geometry and algebra and playing soccer andcricket for the school.
His parents, like so many who had lived through the insecurity of the1930s, wanted a steady job for their only son and suggested the Civil Serviceor a bank. But an initial Civil Service interview did not inspire Harrisonwho turned to his headmaster for advice. "He said: 'Well, Harrison. Youare good at maths - you should be an accountant'."
He joined the small firm of Harker Holloway and, interrupted by twoyears in the Fleet Air Arm which he left - "eight weeks short of gettingmy wings" - he qualified in 1950.
By then he wanted to get into industry, but when he applied to SmithsIndustries it turned him down, so he joined another accountancy firm, GeorgeA Touche, later to become Touche Ross. There he was approached by Ray Brownand Calder Cunningham who had left Plessey to set up Racal. He joined aschief accountant in 1950 when there were just 12 people, rapidly takingover personnel and negotiating with both suppliers and customers. By 1958he had joined the board and when the group floated in 1961 he had becomedeputy managing director.
In the early days he worked seven days a week, 18 hours a day, to getthe orders out. "He has enormous energy and amazing stamina," says hislong-time racing buddy, Sir Eric Parker. Just as important, he took otherswith him. Harrison believes in leadership. "Most people respond to beingled well - both by example and inspiration," he says. "There should bea nice easy style about it, while at the same time demanding a lot. Andthen we have the odd party to celebrate having a product come out on time.We have a few drinks, a few giggles. These things make for a great teamspirit."
But his temper frays with those who lack his sense of purpose. "If someonedoesn't treat a problem with the urgency it needs, that can really causea problem. I love people who have intensity, who anticipate trouble andtake action."
Harrison moved up to be chairman and chief executive in 1966 when Brown,later Sir Ray, joined the Ministry of Defence to be the first head of defencesales, giving Racal a close relationship with government it has never lost.Indeed, Sir Clive Whitmore, the MoD's Permanent Under Secretary until 1988,is a Racal non-executive director.
But Harrison believes his greatest achievement has been in spottingtalent. "When I took over, I put young engineers in charge of most of thebusinesses and gave them autonomy." Three former Racal men now head largecompanies - Sir Gerald Whent at Vodafone, David Peacock at Chubb and TimHolley, the chief executive of Camelot, where Racal has a 20 per cent stake.
Whent has no complaints. "Harrison is an excellent boss. He gave memy head in virtually everything. If he trusts you, he trusts you."
Friends say Harrison is a devoted family man and he spends most weekendsat home with his wife, Janie, devising new schemes for his garden whichboasts bananas and other tropical plants which all have to be winteredin a huge greenhouse.
But essentially he is a man's man, happiest at a men-only day at Newmarket,or standing the lads a round at a local. "He's a great tease," says Parkerwho regularly partners him at snooker. When they stay at the Lygon Armsnear Cheltenham, Harrison thinks nothing of playing snooker until 3.00am and then ordering Dom Perignon and cheese on toast.
He loves practical jokes and once organised three elephants to interruptthe Tilford cricket match where Racal was playing the local team. But behindthe humour is both a spiritual sense - "Yes I believe in God. I say myprayers" - and a continuing need to make an impact. The charity which receiveshis greatest support is the Ronald Raven Chair in Clinical Oncology Trustwhich is developing targeted therapy to treating cancer. "I love it becauseit could be a real breakthrough and could help so many," he says.
Right now his mind is focused on the business. When Elsbury broke thenews about Data Products' order problems in the Middle East and Latin America,Harrison called a board meeting last Sunday to decide whether to tell thestark news on Monday, or risk a leak but present a more balanced storywith the interim results on Tuesday. He took advice to announce on Monday,something he regrets in hindsight.
"It hurt us badly, even though the shares have recovered half theirground. In retrospect we should have held it, and shareholders were disappointed."Harrison appears genuinely confident that the restructuring of Data Productswill result in profitable trading by the second half and a return to healthof the business. But it has been an uncomfortable week. "Yes," he sayswith a wry smile, "it makes me angry when we disappoint ourselves".
Racal Electronics Plc
SIR ERNEST HARRISON TO BE SUCCEEDED BY SIR COLIN CHANDLER AS CHAIRMANOF RACAL
Bracknell, Berkshire, U.K., January 25, 2000. . .Racal Electronics Plcannounces that Sir Ernest Harrison OBE, chairman and chief executive, isto
retire from the Company on 31 January 2000. He will be succeeded bySir Colin Chandler, who will assume the role of chairman until the completionof the
proposed acquisition of Racal Electronics Plc by Thomson-CSF.
Sir Ernest Harrison joined Racal in 1951, becoming a director in 1958and chairman and chief executive in 1966. The Board wishes to acknowledgethe
exceptional contribution that he has made to the success of Racal andthe magnificent leadership that he has given to the Company during thistime. Under his
direction, Racal has delivered outstanding value to shareholders throughthe creation, development and demerger of Vodafone ? now the world's leading
mobile communications company. In addition, Chubb Security was demergedin 1992 and was subsequently acquired by Williams PLC in 1997, creating
further shareholder value. Most recently, Sir Ernest has overseen thesale of Racal Telecom to Global Crossing for £1 billion in November1999 and the
recommended offer for the remaining businesses from Thomson-CSF, announcedon 13 January 2000.
Sir Colin Chandler, 60, was appointed to the Board of Racal as a non-executivedirector on 2 June 1999. He is also currently chairman of Vickers Defence
Systems Limited and a non-executive director of TI Group plc. Priorto joining Vickers in 1989, Sir Colin held senior positions in Hawker Siddeleyand BAE
Systems (formerly British Aerospace) and was Head of Defence ExportSales.
-ENDS-
Ernie, Vodafone's forgotten hero
Simon Fluendy, Mail on Sunday
15 February 2004
IN the City, they called him The Silver Fox for his fabled negotiatingskills. And his loyal army of fans called him the high priest of shareholdervalue.
But Sir Ernie Harrison, creator of Vodafone, never became super-richhimself. He retired four years ago, and this weekend must watch from thesidelines as Vodafone plays a dramatic high-stakes game he would surelyrelish.
Only American phone group AT&T knows if Vodafone has put in a bidof £19 billion for its mobile phones business, trumping rival Cingular.
And some of those close to the deal say Vodafone really plans to pounceon its current US partner Verizon in a £53 billion deal.
When Harrison retired after selling Racal Electronics, the company hehad worked for since 1960, his shares were worth £24 million.
Not bad going, but Sir Christopher Gent - his young protege at Vodafone,which had been spun out of Racal - picked up £10 million in bonusesin the same year.
Along the way, Harrison helped ensure that just a pound invested inRacal Electronics would have been worth £14,000 by the time he soldoff the rump of the company to Thales of France.
He became a legend, not least for creating Vodafone, which was floatedin 1988 worth £1.8 billion. Today, the mobile phones giant is worth£93 billion and at the height of the dotcom boom it hit £270billion.
Apart from Vodafone, other household names owned or started by Racalinclude security group Chubb and Camelot, the National Lottery operator.
Many of Harrison's entrepreneurial schemes were cooked up in late-nightpoker dice sessions with his executives. Harrison always claimed the stakeswere small, but a former staffer says: 'You didn't play unless Ernie knewyou could pay.'
While Harrison's great rival, GEC boss Arnold Weinstock, dismissed mobilephones as a gimmick, Harrison realised that the experience of Racal Electronicsin military radio sets gave it a technological edge.
Racal executives Gerry Whent and Chris Gent were put in charge of theproject. For four years after flotation, Racal kept 80% of Vodafone. Then,in a bold move, Harrison oversaw a huge demerger, handing out Vodafoneshares to all Racal investors. He sold his entitlement to pay for his Racalshare options.
In retirement, Harrison, the son of an East End docker, has taken onno business roles. He has a large house in Surrey and a second home inMajorca. He maintains an interest in horse racing, having once owned awinner of the King George VI stakes at Ascot.
He has refused numerous interview requests since quitting the City.A friend told Financial Mail: 'Sir Ernie has made it clear that retirementto him means just that. No jobs, no interviews.'
Vodafone to shock City with US megabid
Richard Wachman, City editor
Sunday February 8, 2004
The Observer
Arun Sarin, Vodafone's chief executive, is ready to shock the City witha multi-billion-pound bid for AT&T Wireless in what would be the company's most audacious move since its £100 billion takeover of German companyMannesmann in 1999.
The US bid, which could yet be vetoed by the Vodafone board under chairmanLord MacLaurin, would surprise and possibly anger some UK shareholders,who believed that the era of big acquisitions was over after Sarin tookover from his trailblazing predecessor Sir Christopher Gent last summer.
Vodafone has grown into the world's biggest mobile phone company sinceit was spun out of Racal Electronics in the 1980s.
Several investors suspect that a Vodafone intervention in the US biddingwar could be part of an elaborate bluff by Sarin to force up the priceof AT&T Wireless for rival bidders, such as Cingular, another Americancompany, and NTT Docomo of Japan.
But one shareholder said: 'A bluff, possibly, but it could be a doublebluff, in that Vodafone could bid low in the first round, then storm inwith a very large cheque as the auction nears its conclusion.'
Initial bids must be lodged in New York this Friday.
City analysts say they expect Vodafone to fire off a sighting shot ofaround $8 a share, valuing AT&T Wireless at close to $20bn, but excludingmonies owed to it of $6bn. Wall Street brokers have estimated that AT&TWireless could fetch $35bn including this debt. But some observers sayVodafone could yet walk away.
Sarin will need to convince shareholders on several counts if he isreally serious about AT&T. First, that he can sell the company's 45per cent stake in Verizon Wireless, a rival US operator, for a reasonableprice, and avoid a potentially large tax liability. Second, he must becertain in his mind that owning the whole of AT&T Wireless is betterthan owning a chunky minority stake in Verizon, which is the market leader.
AT&T Wireless will take a lot of knocking into shape, but wouldextend the Vodafone brand to the US.
One way to appease share holders would be to acquire At&T Wirelessby issuing new Vodafone shares, but return some of the cash extracted byselling Verizon. The British company's stake in Verizon is estimated atmore than £12bn.
Last night, a big Vodafone shareholder said: 'We would need some persuadingthat a move in America is beneficial, but we would give management a fairhearing.'