US deal approved
Cobham family critical of ‘cynical’ sale of defence firm
Security issues have been raised (pic: Cobham)
Business Secretary Andrea Leadsom has been criticised by the family behind UK defence company Cobham after she signed off a £4 billion takeover of the business by a US private equity firm.
A merger between the manufacturer and US company Advent was agreed in July but was delayed over national security concerns.
Ms Leadsom approved the takeover on Friday night after Advent proposed a number of legally binding obligations to protect the UK’s interests.
These include the ongoing protection of sensitive Government information and requiring prior notice to the Ministry of Defence and Home Office on any future plans to sell the Cobham business.
Mrs Leadsom, who led the government consultation process, said she was confident that the merger would not compromise national security, adding the decision had been “meticulously thought over”.
But Lady Nadine Cobham – daughter-in-law of the firm’s founder Sir Alan Cobham – said the decision was “deeply disappointing” and also criticised the timing of the deal at the beginning of the Christmas break which denied MPs the opportunity to challenge the decision.
Sir Alan founded the business in 1934 as Flight Refuelling Ltd, specialising in air-to-air refuelling technology. Based in Dorset, it employs around 10,000 people, including 1,700 in the UK. It was floated in 1985, although the family maintained a large stake.
Critics said Advent was not a suitable owner because of the private equity firm’s lack of experience in the sector and the short-term mindset of investment companies.
The MoD also feared the security of military information held on the firm’s systems could be undermined if Advent decided to sell off sections of the business.
Lady Nadine said: “This is a deeply disappointing announcement and one cynically timed to avoid scrutiny on the weekend before Christmas.
“In one of its first major economic decisions, the Government is not taking back control so much as handing it away.
“In Cobham we stand to lose yet another great British defence manufacturer to foreign ownership, through a takeover that would never have been approved by the Americans, French or Japanese, all of whom have taken steps recently to raise protections for their own defence sectors.”
However, 93% of shareholders supported the board’s recommendation to accept the offer. In October the company’s chairman Jamie Pike said the board believed that the acquisition by Advent “will create significant opportunities for Cobham to better serve its customers.”
Andrea Leadsom: ‘meticulously thought over’
In a statement issued last night, Ms Leadsom said: “Having considered the consultation responses and further advice from the defence secretary, I am satisfied that the undertakings mitigate the national security risks identified to an acceptable level and have therefore accepted them and cleared the merger to proceed.
“While trade and investment play an important part in the UK economy, when intervening in mergers on national security grounds, I will not hesitate to use my powers to protect national security, if it is appropriate to do so.
“Separately, the companies have given a legally binding commitment that there will be significant protection of jobs and have also agreed with the takeover panel that Cobham’s headquarters will remain in the UK, that the Cobham name will continue to be used and that there will be a guaranteed level of R&D spend.
“This will secure the future of Cobham and the important role it plays in our world-leading defence sector and economy.”