The Anglo File: Energis May Not Be the Best Destiny for Racal

LONDON -- The U.K. telco Energis(ENGSY Quote) is in talks to buy Racal Telecom, a division of Racal Electronics (RCALY Quote). Racal Telecom, however, is certainly no Vodafone (VOD Quote), another business Racal Electronics spun off, and it is questionable whether this is an appropriate acquisition for Energis.

Following a series of reports in weekend newspapers, Racal confirmed on Monday it is in advanced discussions to sell its telecom division to Energis for between 700 million and 800 million pounds ($1.1 billion and $1.3 billion). Both stocks reacted positively to the news, with Racal closing on Monday up 6.8% and Energis up 2.3%. By Wednesday, both had given back some of those gains with Racal down 0.4% to 409 pence and Energis slipping 1.4% to 1,540 pence.

Energised Shares Stock price of Energis (ENGSY) year-to-date

Source: Baseline

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