15.4 On November 15, 1990, the Chairman and CEO of Racal Electronics, Sir Ernest Harrison announced a de-merger (breakup) plan for two of its three main business units. Sir Ernest’s purpose was not clear. One observer suggested that he might have been trying to avert a possible takeover directed to taking control of Racal’s profitable cellular business. Racal was one of the fastest growing UK companies in the 1970s, reaching in 1990 a level of sales and pre-tax profits estimated at £2.0 billion and £201 million, respectively. Racal’s three business units were:• (1) Racal Telecom, the successful operator of the Vodafone cellular phone business, 80% of which was owned by Racal Electronics and the rest was publicly traded;