ERICSSON, the Swedish telecoms equipment maker will today announce a deal to acquire Marconi, the stricken British engineering group, for £1.2 billion.

The deal will include an estimated £700 million to cover Marconi’s pension liabilities. Ericsson beat off interest from Alcatel, of France, and Siemens, of Germany.

Marconi was effectively put up for sale in April after its biggest customer, BT Group, dropped the company from its planned pounds £10 billion network renewal programme. Ericsson is believed to be most interested in Marconi’s optical transmission business, together with its existing service and maintenance contracts across Britain.

The Swedish company secured a key part of the BT contract that Marconi failed to secure.

Carl-Henric Svanberg, Ericsson’s chief executive has so far refused to be drawn on a possible takeover. Only last Friday he said of Marconi: “They have actively been seeking partnerships or relationships and there have been rumours about discussions between them and, I think, every other player.”

Marconi has about £280 million of cash in addition to more than £413 million of tax losses. The company also has a large pension liability. According to the latest figures, the Marconi pension fund covers 38,000 pensioners and more than 30,000 deferred pensions — workers who have moved to other employers and have yet to call on their pension benefits. Against this, there are fewer than 3,000 workers still contributing to the scheme.

Under last year’s Pensions Act, the new pensions regulator — currently David Norgrove — can demand that any company taking Marconi over must provide legally binding guarantees that all pension liabilities will be met.

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