His father was a docker who worked for years under the notorious casual labour scheme and his mother, today still going strong at 93, supplemented this precarious income by making ties in a nearby "sweat shop" or, when Harrison and his sister were young - at a sewing machine at home.
Harrison remembers the family "moving up market to Holloway and then even more up market to Wood Green" where in 1942 he finished his grammar school education at 16.
A bit of a tearaway when evacuated at the start of the war, he was moved from 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 a civil servant but after consulting his headmaster Harrison chose accountancy. Service as a Fleet Air Arm pilot in Canada towards the end of the war interrupted training 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 Smiths Industries in Cricklewood." he says. So he sought to broaden his experience at Touche Ross.
Within a year the partners of his old firm were in touch. One of their clients, a new consultancy founded by two ex-Plessey men, Ray Brown (later Sir Ray) and Calder Cunningham, was planning to move into manufacturing. It needed a qualified accountant to keep an eye on the costs. They offered Harrison £650 a year to start.
That was 41 years ago. Today he earns more than £400,000 as chairman and has made a £10 million personal fortune through his shares in Racal and Vodafone, the mobile phones company he demerged last year.
Few investors will resent his good fortune. He is Britain's high priest of shareholder value. Anyone who invested £1,000 in Racal when it went public in 1961 and then supported the two subsequent rights issues now 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 threatened bid from Cable & Wireless, proved effective in unlocking shareholder value.
Now Harrison is preparing a repeat performance with the coming spin-off of Chubb Security. The demerger plan helped scotch last year's hostile bid from Williams Holdings.
Harrison enjoys his good fortune. He owns and breeds racehorses, and is a member of the Jockey Club. His best known horse, Cacoethes (Greek for "itch"), came third in the Derby three years ago. He lives with his second wife, Janie, on an exotic 15-acre spread in Surrey. The house is built in the style of a Spanish nobleman's hacienda.
He loves entertaining and the banqueting suite in his home can easily accommodate 70 guests. On winter Sundays the snooker room is the venue for an endless series of grudge contests between Harrison and his partner, Sir Eric Parker of Trafalgar House, against former Touche Ross senior partner Michael Blackburn and food broker Desmond Cracknell.
He is a fanatical gardener and the Harrison estate is rich in tropical vegetation. He even grows bananas.
Despite the honours, the wealth and success, Harrison remains a typical Cockney: shrewd, tough and abrasive but generous of spirit - a type you meet on every taxi rank, in every street market and on every football ground in London. If he were not busy with other commitments, his daughter, Deborah, who works on light entertainment programmes at the BBC, could probably fix him up with a bit part in East Enders.
Adviser Sir Michael Richardson of Smith New Court, says: "He has not been spoilt by his achievements and remains an intensely likeable man. When the bid from Williams came out last year he looked like a loser at the beginning. But his leadership turned the whole thing round. In another war I would love to serve in his battalion."
Tom O'Connell of Guardian Royal Exchange, which has been a backer since the start, says: "What I particularly like is his openness. If he is doing well he will tell you. If he is doing badly he will also tell you. He is a genuine industrialist, not an asset stripper and he is not afraid to spend 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 "nearly went bust" spending £40,000 to iron out the bugs in its first proprietary product a high frequency radio receiver.
Before then Racal had worked only as a subcontractor for the Government or for bigger companies such as Marconi.
It only survived, Harrison says, because the Government cancelled an order from its own agency and switched to Racal. The gamble on new technology paid off again and again in subsequent years.
Harrison is a sentimental man with vivid recollections of those early years. Appropriately, our interview took place at the Bracknell office to which Racal moved in 1954, enticed by a 99 year lease at four shillings and sixpence per sq ft - and no rent reviews. The plain panelled room with its robust and unfashionable furniture can have altered little in the intervening years.
"There were just 12 employees when I joined. I was lucky because Ray Brown 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 awake by chain smoking.
These days that astonishing stamina is applied as much to leisure as to business. It is said he once flew to Australia to watch a horse race and then flew straight back in time to watch the Cup Final. He is a dedicated Arsenal fan.
In the early hothouse atmosphere at Racal, Harrison honed the ideas he was to put into practice as boss. "The reason that first radio was so successful was because we were a small team working together," he says. "All of us knew the product inside out. There was close supervision and that critical factor - intensity of effort."
(This first radio Racal manufactured was the famous RA17 "Wadley High Frequency Radio Receiver" made under license to the South African Council for Scientific and Industrial Research - The RA17 was based on a "prototype" developed in Pinetown Natal by SMD later to become RACAL-SMD.)
As his business empire burgeoned Harrison strived to retain that small company culture. "If development activity becomes too large it becomes difficult to supervise," he says. "But if you assemble one team of engineers and give them just one product to work on they become one family. Do it that way and it will come out near enough on time and to cost. Try to develope 10 or 12 products at the same time and you can guarantee they will all run late and over budget."
"That is really why small companies start. They live, eat and sleep the one product and when it comes out it is super."
As Racal evolved so more and more autonomous units were set up. That structure enabled Harrison to respond quickly when new opportunities arose. Its logical out come should be yet more demergers from the mother ship in the years ahead.
A South African offshoot (RACAL-SMD) gave him the tactical radio which was to make Racal a byword of organic growth in the 1960's and 1970's.
When the cellular radio opportunity came in the early 1980's it was prompted by a former worker whom Harrison had "let go" on generous terms and set up as a consultant.
At 66 he shows no inclination to retire. "I think he will go on and on because he enjoys himself so much," predicts Parker.
Whatever he decides, the reins of power are already being passed to others. As at Vodafone, he will have no executive role at Chubb, and he has groomed David Elsbury to succeed him at Racal.
At the top of the organisation is a spirit of brotherhood and loyalty Harrison has fostered. When directors meet they invariably embrace in the continental 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 and a third works for S G Warburg in Holland.
The rule begun by Ray Brown is good for the company and probably good for the children as well." he says. "It means everyone here knows they can get to the top of the organisation. David Elsbury used to come to work on a pushbike and started here straight from the RAF as a tester on a production line. 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 eyes the colour of Courage bitter as he re-runs the arguments in his defence against Williams.
But humour is never far from the surface. When his veteran PR man, Ken Ward, invited him to a birthday party at his home, Harrison turned up with several hairy gatecrashers: the chimps from the Brooke Bond TV ads. It was an echo of an earlier zoological incident when Harrison had phoned Ward 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 but the " 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 other words the quality of life that we seek to enjoy, depends so very much upon ourselves.
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 London
won a diploma of Faraday House with Honours, was a gold medallist and gained a Bachelor of Science - Engineering degree.
In 1938, by which time he had become an associate member of the Institute of Electrical Engineers, he joined the Marconi Wireless Telegraph Co. as an installations engineer.
During WW2, he was responsible for the installation of direction finding equipment at both home and overseas stations. At the end of hostilities Douglas 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 he met Calder Cunningham, who had been the signals controller at British Overseas Airways Corporation.
In 1950 they left Plessey to form their own company, Racal.
The company was successful and grew. In 1953 Ray Brown asked Douglas to join Racal as their first sales manager, which he did in April of that year.
At that time sales were running at an annual rate of some £100,000 and pre-tax profits less than a thousand.
But the company was now growing fast and in continual need of more capital and Douglas made his first investment in Racal in the year 1954. In 1955 he increased his investment and became a director of the parent board which at that time bore the name of Racal Engineering Ltd.
In that same year an event of the greatest significance took place within Racal.
Ray and Douglas knew that the British government and indeed, most other government throughout the world needed to replace their high frequency general purpose communications receivers which were of both pre-war and war time vintage. An engineer by the name of Trevor Wadley, working for the Council of Scientific and Industrial Research in Pretoria had invented and patented unique circuitry which he had built into an H.F. receiver.
The result was a substatially improved performance over existing equipment especially in the ability to re-set.
A licence for exclusive use of this circuitry was offered firstly to the British government, but they declined on the grounds that they were funding their own development.
It was then offered to most of the major electronic companies in the U.K. but they all declined on the grounds that there as too much spurious noise 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 an official commonwealth publication. She knew Calder Cunningham and she recommended that they make contact with Racal.
They did and we talked. We examined the receiver and very naïvely felt confident that the spurious noise problem could be overcome.
Fortunately they did not insist on a down payment and Douglas negotiated and 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 proprietary product. A general purpose high frequency communications recevier named the RA17.
There was, however, one very big problem facing us. How do we finance it? The models supplied under the licence agreement were very much prototypes.
The cost of completing the development, especially the elimination of spurious, the manufacture of 'B' models and the preparation of manufacturing drawings was going to be high.
We had to raise more equity capital and a scheme was devised to achieve
this. We had at that time some 10 shareholders all with differing financial
circumstances. Some were happy to make further investment but others were not in a position to do so and did not like the idea of dilution of their equity percentage.
It was the age old problem which confronts the founding shareholders of 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 company with increased financial resources sufficient to ensure substantial growth.
The debate went on, far too long, and we were unable to finalise the share scheme for some time.
In the meantime we were pressing on with the development of the R.A.17 and our liquid position was becoming extremely difficult.
One evening, Douglas and I went for a drink at the Downshire Arms in Bracknell, and discussed the subject, as we often did. At the end of our conversation, and being made aware of our financial difficulties and of the 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 can tell me later what type of shares and how many I will get."
Here was Douglas putting the best interests of the company before personal gain.
He didn't have to do it - but he did - very few people would have done that and no other shareholder did.
I cannot tell you how critical it was to receive that money and there is no doubt in my mind that that wonderful gesture taken together with his 29 years of magnificent service to the company made his contribution to the success of Racal as great as anyone's. Certainly no one has done more.
The share scheme was eventually agreed and the necessary cash raised but the development of the RA17 took much longer and cost much more than planned. 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 and set 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 another major company and the RA17 became the standard H.F. receiver for all the armed forces and monitoring agencies of the United Kingdom.
We recognized, hoever, that the export market was going to be a most important factor in our future growth, and Douglas was given the resposibility:
The RA17 was sold to most countries including the U.S.A., and total sales were in the order of 25,000.
It was Douglas's unquestionable integrity and enthusiasm that enabled
Racal to forge those early critical relationships with overseas customers.
Douglas's pioneering work that firmly established the cornerstone of Racal's export success. It was Douglas, together with Ken Ward, who organized the extremely successful series of RacalEx exhibitions in London to which customers from around the world were flown to witness at first hand Racal's products and capabilities.
From those early beginnings Racal now serves customers in 140 countries and 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, has exported 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 held until his retirement from the main board in 1982. When he joined the company in 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 Stock Exchange in 1961, the market capitalisation was £1.4 million. When Douglas retired, the market capitalisation was £1.4 billion, and an investment of £1,000 in 1961 was worth £500,000.
After his official retirement, he continued to have a close involvement through the group's various activities in Germany. Despite his big responsibilities with Racal, he always found time to serve the industry and the profession of which he was a very proud member. Indeed, he was elected a Fellow of the Institute of Electrical Engineers in 1962. He was for many years a council member of the Electronics Engineering Association and enjoyed the honour of being its president in 1978. He was a council member of the Society of British Aircraft Constructors. In 1982, Douglas was honoured by the Queen for his outstanding service to our country and became a companion member of the most distinguished order of the British Empire [sic].
He had been clothed as a Member of the Worshipful Company of Scientific Instrument Makers in 1961, and retired from the court when the family moved to Münich in 1982. Had he not retired, he would almost certainly have become Master.
Douglas loved life and lived it to the full.
He had many interests and hobbies. In his earlier days he enjoyed enormous pleasure from sailing. He was extremely fond of music, opera and ballet. He constructed a miniature model railway and had a very interesting collection of clocks.
Above all he loved parties. With Isa, he always supported the many Racal social function and I'm sure that we can all recall seeing Douglas late at night sitting cross-legged on the floor - a glass in one hand and a cigarette 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 experienced wonderful times and shared so many successes - above all else we had a lot of fun. he always gave me unstinting support, and I shall always be indebted to him for so many things.
Douglas is going to be missed by so many, but especially of course by his family: By Isa, who was by his side for 30 years and gave him great love, 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 who achieved 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 remember Douglas as a wonderful man who put far more into life than he ever took out.
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's son who still calls morning meetings at 7.30 am but hates anyone to leave his parties before dawn, has created a work hard, play hard culture at Racal, Chubb and Vodafone which has endured the monochrome 1990s. A fierce patriot who served in the Fleet Air Arm in 1944, Harrison may sell Racal's defence products around the world but he buys British, driving a Jaguar to his Bracknell, Berkshire, office and bringing out his Rolls-Royce only for special occasions.
Well known in racing circles and a member of the Jockey Club, Harrison owns four horses and has part shares in five others while Racal sponsors the Derby. Until last week shareholders had never begrudged him a day at the 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 useful 411,000 if they had been spent.
But Racal's surprise warning last Monday, forecasting taxable profits of no more than 50m against last year's 70m due to problems in the Data Products division selling to the military, saw the share price drop 50p on the day and set fund managers muttering about Harrison's emotional attachment to once-great businesses that now drag the company down. Perhaps, they say, he should at last think about retiring.
In his 30 years at the top of Racal, which have included buying Decca from under Lord Weinstock's nose, demerging Vodafone and spinning off Chubb, Harrison has avoided most of the bear traps awaiting those entrepreneurs who create multi-million corporations from tiny beginnings. Even though he is a passionate Arsenal supporter, he has resisted the lure of buying into a football club. He has kept his loafer-shod feet firmly on the ground and 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 agreed that anyone in the company should feel they can make it to the top," he says. "Nepotism is bad for companies and bad for the children." But everyone has a weak spot and it seems that like Lords Hanson and Weinstock, Harrison is finding relinquishing control of the company he created the toughest challenge 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's 70th birthday passed in May - notably without the expected lavish celebration - he remains an active executive chairman. Elsbury says it is a rare day when he and Harrison do not speak. "If there is a problem we always meet first 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 his plans for the future? I inquire. A grin lights up his face at the inevitability of the question. "There has got to come a time when I retire, that's a fact," he says, sounding remarkably relaxed. "But these subjects are debated by the nomination committee, the main board, and subsidiary boards. The nomination committee met six months ago and discussed succession and we will meet again in another few months." I note the "we".
Tanned from a break in Barbados, Harrison looks the picture of health and although his hair is white he could pass for early 60s. His capacity for 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 shirt with long curved cuffs showing off gold lozenge links, a navy and gold tie and silk pocket hanky. Although his manner is mild, he has the look of 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 hopes he will quit while Racal is in trouble is likely to hope in vain. When he finally leaves the company he joined in 1951, he intends it to be in triumph. "I am looking forward to being here certainly next year to enjoy Data Products' success because that has been a very difficult business for 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 Taurus like that other great deal-maker and lover of thoroughbreds, the late Sir Gordon White. His father was a docker who under the casual labour scheme would pay his own fare to the docks in the hope of work. On average he got work two or three days a week. His mother, Gertrude, who died only last year at 96, made ties to boost the family income which allowed Harrison to stay at school. From Hackney the family moved to Holloway and then Wood Green where Harrison attended Trinity Grammar. But when the war started Trinity moved to the Essex village of Hatfield Peverel and a lively 13-year old Harrison was billeted on four families before finding happiness with the fifth. "I didn't always come home at the right time," he admits. But the 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 with distinction in arithmetic, geometry and algebra and playing soccer and cricket for the school.
His parents, like so many who had lived through the insecurity of the 1930s, wanted a steady job for their only son and suggested the Civil Service or a bank. But an initial Civil Service interview did not inspire Harrison who turned to his headmaster for advice. "He said: 'Well, Harrison. You are good at maths - you should be an accountant'."
He joined the small firm of Harker Holloway and, interrupted by two years in the Fleet Air Arm which he left - "eight weeks short of getting my wings" - he qualified in 1950.
By then he wanted to get into industry, but when he applied to Smiths Industries it turned him down, so he joined another accountancy firm, George A Touche, later to become Touche Ross. There he was approached by Ray Brown and Calder Cunningham who had left Plessey to set up Racal. He joined as chief accountant in 1950 when there were just 12 people, rapidly taking over personnel and negotiating with both suppliers and customers. By 1958 he had joined the board and when the group floated in 1961 he had become deputy managing director.
In the early days he worked seven days a week, 18 hours a day, to get the orders out. "He has enormous energy and amazing stamina," says his long-time racing buddy, Sir Eric Parker. Just as important, he took others with him. Harrison believes in leadership. "Most people respond to being led well - both by example and inspiration," he says. "There should be a nice easy style about it, while at the same time demanding a lot. And then 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 team spirit."
But his temper frays with those who lack his sense of purpose. "If someone doesn't treat a problem with the urgency it needs, that can really cause a problem. I love people who have intensity, who anticipate trouble and take 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 defence sales, 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 spotting talent. "When I took over, I put young engineers in charge of most of the businesses and gave them autonomy." Three former Racal men now head large companies - Sir Gerald Whent at Vodafone, David Peacock at Chubb and Tim Holley, the chief executive of Camelot, where Racal has a 20 per cent stake.
Whent has no complaints. "Harrison is an excellent boss. He gave me my head in virtually everything. If he trusts you, he trusts you."
Friends say Harrison is a devoted family man and he spends most weekends at home with his wife, Janie, devising new schemes for his garden which boasts bananas and other tropical plants which all have to be wintered in 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 Parker who regularly partners him at snooker. When they stay at the Lygon Arms near Cheltenham, Harrison thinks nothing of playing snooker until 3.00 am and then ordering Dom Perignon and cheese on toast.
He loves practical jokes and once organised three elephants to interrupt the Tilford cricket match where Racal was playing the local team. But behind the humour is both a spiritual sense - "Yes I believe in God. I say my prayers" - and a continuing need to make an impact. The charity which receives his greatest support is the Ronald Raven Chair in Clinical Oncology Trust which is developing targeted therapy to treating cancer. "I love it because it could be a real breakthrough and could help so many," he says.
Right now his mind is focused on the business. When Elsbury broke the news about Data Products' order problems in the Middle East and Latin America, Harrison called a board meeting last Sunday to decide whether to tell the stark news on Monday, or risk a leak but present a more balanced story with 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 their
ground. In retrospect we should have held it, and shareholders were disappointed."
Harrison appears genuinely confident that the restructuring of Data Products
will result in profitable trading by the second half and a return to health
of the business. But it has been an uncomfortable week. "Yes," he says
with 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 CHAIRMAN OF RACAL
Bracknell, Berkshire, U.K., January 25, 2000. . .Racal Electronics Plc
announces that Sir Ernest Harrison OBE, chairman and chief executive, is
retire from the Company on 31 January 2000. He will be succeeded by Sir Colin Chandler, who will assume the role of chairman until the completion of the
proposed acquisition of Racal Electronics Plc by Thomson-CSF.
Sir Ernest Harrison joined Racal in 1951, becoming a director in 1958
and chairman and chief executive in 1966. The Board wishes to acknowledge
exceptional contribution that he has made to the success of Racal and the magnificent leadership that he has given to the Company during this time. Under his
direction, Racal has delivered outstanding value to shareholders through the creation, development and demerger of Vodafone ? now the world's leading
mobile communications company. In addition, Chubb Security was demerged in 1992 and was subsequently acquired by Williams PLC in 1997, creating
further shareholder value. Most recently, Sir Ernest has overseen the sale of Racal Telecom to Global Crossing for £1 billion in November 1999 and the
recommended offer for the remaining businesses from Thomson-CSF, announced on 13 January 2000.
Sir Colin Chandler, 60, was appointed to the Board of Racal as a non-executive
director on 2 June 1999. He is also currently chairman of Vickers Defence
Systems Limited and a non-executive director of TI Group plc. Prior to joining Vickers in 1989, Sir Colin held senior positions in Hawker Siddeley and BAE
Systems (formerly British Aerospace) and was Head of Defence Export Sales.
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 negotiating skills. And his loyal army of fans called him the high priest of shareholder value.
But Sir Ernie Harrison, creator of Vodafone, never became super-rich himself. He retired four years ago, and this weekend must watch from the sidelines as Vodafone plays a dramatic high-stakes game he would surely relish.
Only American phone group AT&T knows if Vodafone has put in a bid of £19 billion for its mobile phones business, trumping rival Cingular.
And some of those close to the deal say Vodafone really plans to pounce on its current US partner Verizon in a £53 billion deal.
When Harrison retired after selling Racal Electronics, the company he had 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 bonuses in the same year.
Along the way, Harrison helped ensure that just a pound invested in Racal Electronics would have been worth £14,000 by the time he sold off the rump of the company to Thales of France.
He became a legend, not least for creating Vodafone, which was floated in 1988 worth £1.8 billion. Today, the mobile phones giant is worth £93 billion and at the height of the dotcom boom it hit £270 billion.
Apart from Vodafone, other household names owned or started by Racal include security group Chubb and Camelot, the National Lottery operator.
Many of Harrison's entrepreneurial schemes were cooked up in late-night poker dice sessions with his executives. Harrison always claimed the stakes were small, but a former staffer says: 'You didn't play unless Ernie knew you could pay.'
While Harrison's great rival, GEC boss Arnold Weinstock, dismissed mobile phones as a gimmick, Harrison realised that the experience of Racal Electronics in military radio sets gave it a technological edge.
Racal executives Gerry Whent and Chris Gent were put in charge of the project. For four years after flotation, Racal kept 80% of Vodafone. Then, in a bold move, Harrison oversaw a huge demerger, handing out Vodafone shares to all Racal investors. He sold his entitlement to pay for his Racal share options.
In retirement, Harrison, the son of an East End docker, has taken on no business roles. He has a large house in Surrey and a second home in Majorca. He maintains an interest in horse racing, having once owned a winner 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 retirement
to him means just that. No jobs, no interviews.'
Vodafone to shock City with US megabid
Richard Wachman, City editor
Sunday February 8, 2004
Arun Sarin, Vodafone's chief executive, is ready to shock the City with a 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 company Mannesmann in 1999.
The US bid, which could yet be vetoed by the Vodafone board under chairman Lord MacLaurin, would surprise and possibly anger some UK shareholders, who believed that the era of big acquisitions was over after Sarin took over from his trailblazing predecessor Sir Christopher Gent last summer.
Vodafone has grown into the world's biggest mobile phone company since it was spun out of Racal Electronics in the 1980s.
Several investors suspect that a Vodafone intervention in the US bidding war could be part of an elaborate bluff by Sarin to force up the price of AT&T Wireless for rival bidders, such as Cingular, another American company, and NTT Docomo of Japan.
But one shareholder said: 'A bluff, possibly, but it could be a double bluff, in that Vodafone could bid low in the first round, then storm in with 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 of around $8 a share, valuing AT&T Wireless at close to $20bn, but excluding monies owed to it of $6bn. Wall Street brokers have estimated that AT&T Wireless could fetch $35bn including this debt. But some observers say Vodafone could yet walk away.
Sarin will need to convince shareholders on several counts if he is really serious about AT&T. First, that he can sell the company's 45 per cent stake in Verizon Wireless, a rival US operator, for a reasonable price, and avoid a potentially large tax liability. Second, he must be certain in his mind that owning the whole of AT&T Wireless is better than owning a chunky minority stake in Verizon, which is the market leader.
AT&T Wireless will take a lot of knocking into shape, but would extend the Vodafone brand to the US.
One way to appease share holders would be to acquire At&T Wireless by issuing new Vodafone shares, but return some of the cash extracted by selling Verizon. The British company's stake in Verizon is estimated at more than £12bn.
Last night, a big Vodafone shareholder said: 'We would need some persuading
that a move in America is beneficial, but we would give management a fair