Troubled telecoms equipment maker Marconi has become a prime takeover target following the collapse of its share price, chief executive Lord Simpson has admitted.

Lord Simpson has, in a series of interviews with Sunday newspapers, hinted that merger is a key consideration in plans to restore profits and investor faith in Marconi following last week's debacle.

The firm's share price halved on Thursday, and lost further ground on Friday, after it warned of a "very, very significant" slowdown in European business.

"Obviously with the share price lower, we are more vulnerable than we were a few weeks ago," Lord Simpson told the Mail on Sunday.

And he told Sunday Business that Marconi "will play a role" in widespread consolidation he foresees among telecoms operators and equipment makers.

"But we are big enough... to ensure there will be no distress sale," he said.

"But we are determined to restore value for our shareholders."

Merger partners

Lord Simpson is renowned as a merger specialist, and gained considerable plaudits over the sale of Rover to BMW in 1994, and Lucas to the US's Varity two years later.

Likely merger partners include French rival Alcatel, which in May failed in an effort to merge with Lucent, and internet networking giant Cisco, which a month ago was rumoured to be considering a bid for Marconi.

Cisco chief executive John Chambers was reported then to have told advisers to delay making an approach until Marconi had completed a restructuring announced in April.

With Marconi shares closing on Friday at 104.5p, compared with about 350p a month ago, Cisco would be able to snap up the firm for less than one third the outlay it might earlier have accounted for.

'Extremely angry'

All eyes will be on Lord Simpson as he tries to restore Marconi's fortunes, following his decision to stay on as chief executive.

While he was due at the end of the month to become chairman, the ousting on Friday of John Mayo, finance director and chief executive designate, prompted a board room rethink.

Mr Mayo was seen by City analysts as the brains behind Marconi's transformation from a diversified group into a firm focused on telecoms, a change which left the company worryingly vulnerable to the downturn in technology markets.

But there may be calls from City chiefs and leading Marconi shareholder Lord Weinstock for further blood unless the firm's performance improves dramatically, newspapers said.

Lord Weinstock, who spent 33 years building up GEC, which was later renamed Marconi, and still boasts considerable influence at the firm is said to be "extremely angry" at the company's fall from grace.

"Like me, he believes the entire board and executive should be replaced," a friend of Lord Weinstock is quoted as telling the Mail on Sunday.

"It would be fair to say that he will be doing what he can to ensure there are changes at the highest level."