Admiral’s fears over £4bn grab for UK defence giant
US predator urged to come clean over plans for Cobham
September 4
A FORMER Royal Navy chief today urges ministers to investigate the foreign takeover of a crucial part of Britain’s defence industry.
Admiral Lord West says he is ‘deeply concerned’ about the proposed sale of Dorsetbased aerospace giant Cobham to American private equity firm Advent International for £4 billion.
‘It is time to think again,’ the former First Sea Lord told the Daily Mail. ‘We are in a highly dangerous and chaotic world and old alliances and agreements are under strain. Now is not the time to take risks with our defence industries.’
The comments pile pressure on Busi1934 ness Secretary Andrea Leadsom and Defence Secretary Ben Wallace to intervene amid fears the takeover is a threat to the UK’s national security.
With a crucial shareholder vote on the deal due to take place on Monday, there are fears the Government could wave it through without a proper inquiry.
Opponents – including the company’s founding family, MPs, former defence ministers and past executives – claim the sale could affect the UK Armed Forces’ access to Cobham’s technology or lead to the loss of hightech jobs.
Tory grandee Michael Heseltine, who served as industry secretary under John Major and as defence secretary under Margaret Thatcher, warned: ‘No other country in the world would allow serious defence contractors to be sold off without proper scrutiny – especially the United States.’
Advent has pledged to keep Cobham’s headquarters in Wimborne, Dorset, continue spending on research and development, and intends to cut only about 1 per cent of jobs. Cobham, founded in by Sir Alan Cobham, who is said to be the inspiration for Biggles, is a worldleading defence company that pioneered the technology for airtoair refuelling.
Its products have been used in Concorde, F35 fighter jets and the International Space Station.
But the company has had a torrid few years, forcing it to issue five profit warnings between 2015 and 2017. Under new management the company has begun to revive its fortunes – but when Advent approached with a takeover offer in late July it was enthusiastically backed by Cobham’s board.
Tory MP Julian Lewis, chairman of the Commons defence committee, piled further pressure on Mr Wallace by warning that future UK defence projects may be ‘weakened’ if Cobham was unable to take part.
He has written to the defence secretary demanding reassurances that Britain’s defence industry and efforts to develop the UK’s first unmanned fighter jet, Tempest, would not be affected. Cobham is not working on Tempest, but questions have been raised about whether it would be able to participate if it is owned by a foreign firm.
Defence and business department officials have met Advent and Cobham, and Mrs Leadsom has said she may seek to extract legallybinding promises from them before approving the merger. The Government can step in and either investigate or block a foreign takeover if it raises concerns about national security, financial stability or media plurality.
Cobham’s shareholders will vote on whether to accept the takeover on Monday. The firm needs 75 per cent of the votes cast at the meeting for the deal to go ahead.
A Cobham spokesman said: ‘The UK has... embraced a free and open defence market, where value for money has been a significant consideration for MoD procurement decisions, rather than the national identity of the supplier.’
Advent said: ‘As a future owner, Advent would look to grow Cobham, including in the UK.
‘It is our intention to support Cobham’s participation in any tenders where it wishes to compete and grow.’
A government spokesman said: ‘The Business Secretary has the power to intervene in mergers on public interest grounds covering national security or financial stability. If any national security concerns are raised they will be taken into consideration.’
THE battle for Cobham heated up last night after one of the defence firm’s major investors hit out at its planned takeover by a uS private equity group.
Sanderson Asset management said it was ‘inclined to vote against’ Advent international’s £4bn offer at a crucial shareholder meeting to be held on monday.
‘We have privately communicated our position to the board along with our desire to see the management team continue their good work in the event a better offer does not materialise,’ said Sanderson senior portfolio manager Christian paaskesen.
it is the first time one of Cobham’s institutional shareholders has said it could oppose the deal. Silchester international investors, until recently the largest shareholder, has urged the board to seek a better offer than Advent’s 165p-a-share bid.
But it has stopped short of saying which way it will vote. the Sanderson comments came in a letter to Lady Cobham, who was married to former boss Sir michael Cobham, the son of founder Sir Alan Cobham.
She wrote to Cobham’s 15 largest shareholders urging them to vote against the deal.
She said the offer was far too low and that Advent would reap the benefits of the company’s turnaround after a slew of profit warnings rocked the firm between 2015 and 2017.
paaskesen said the firm ‘broadly agrees’ with her assessment of the offer. Sanderson’s intervention comes as former naval chief Admiral Lord West said he is ‘deeply concerned’ about a sale.
He has urged the Government to assess the deal, adding another voice to a growing opposition led by the Cobham family that includes former defence secretary michael Heseltine, former business secretary Vince Cable and former executives.
they have slammed the deal for undervaluing the firm and demanded that the Business Secretary Andrea Leadsom and Defence Secretary Ben Wallace investigate the proposed takeover before allowing it to go ahead. Leadsom has the power to intervene and block foreign buyouts if they pose a threat to national security, financial stability or media plurality.
She has met representatives from Cobham and Advent but has yet to suggest she will intervene. Cobham, founded in 1934 by Sir Alan Cobham, who is said to be the inspiration for fictional hero Biggles, pioneered the technology for air-to-air refuelling.
its products have been used in Concorde, F-35 fighter planes and the international Space Station. Advent will need the support of 75pc of votes cast at the one-off meeting being held next monday for the takeover to go through.
So far, it has the support of Cobham’s management and top-10 investor Artemis investment management, which adds up to 5.2pc of the company’s holdings.
Sanderson owns around 2.4pc of shares, making it the 11th largest shareholder.
Added together with the 1.5pc of shares owned by the Cobham family, it means almost 4pc of shares could be cast against the offer next week.
meanwhile, powerful hedge funds including AqR Capital, melqart Asset management and moni partners are believed to have taken an almost 5pc stake in Cobham. their presence as short-term investors is thought by analysts to indicate that the deal is likely to go ahead.
Jamie pike, the chairman of Cobham, has said it would be willing to accept higher offers – but none have yet come through.
Yesterday, the shares fell 1.9pc, or 3.1p, to 156.6p. Cobham and Advent declined to comment.