Merlin Communications sold by 3i

Merlin Communications, the radio transmission business that was acquired by its management in a 3i-backed buyout, has been sold to defence contractor, Vosper Thorneycroft for GBP95 million. The management team, headed by chief executive Fiona Lowry, is reported to have received a payment of around GBP30 million as a result of the sale. 3i is not able to comment on the deal until next month.

In 1997, Merlin was formed through a GBP21.2 million management and employee buyout of the BBC’s World Service Transmission. 3i led the deal and Electra Partners also invested.

Merlin provides communications, facilities management and technical support services to customers, including the Ministry of Defence, BBC World Service and the European Space Agency. The company offers services for radio communications (including commercial short wave radio) and satellite ground support.

The company will become a subsidiary of Vosper Thorneycroft, which has recently made the strategic decision to broaden the market base of its support services business. The company is a civil and defence contractor, focused on support services (which will include Merlin), shipbuilding (supplying The Royal Navy) and marine products. The company employs 7,500 people in the UK, Europe, US and Middle East and generated a GBP379 million turnover for 2000/2001. Commenting on the acquisition, Martin Jay, the company’s chief executive, said: “It marks the commencement of an important new relationship with the BBC and deepens our relationship with the Ministry of Defence.”

Olswang advised Merlin’s shareholders, other advisors include Cameron McKenna, Dresdner Kleinwort Wasserstein and Hawkpoint Partners.