Leadsom to wave through £4bn Cobham takeover
BORIS Johnson’s Government has moved a step closer to waving through the £4bn private equity takeover of Cobham.
Business Secretary Andrea Leadsom said she is ‘minded to accept’ a number of pledges put forward by the British defence firm’s US suitor Advent International to ease concerns that the deal poses a threat to national security.
But critics hit back at the move, warning it was ‘bargaining away’ Britain’s security and that allowing the deal to go through will do ‘long-term damage’ to the defence sector.
It is the first major international takeover that Johnson’s Government has been forced to make a decision on.
In order to get the green light, Leadsom said Advent must ‘continue and strengthen’ existing security arrangements that are designed to protect ‘sensitive government information’. It will have to put Britons in charge of sensitive contracts, as well as maintain and honour any existing contracts for the next five years.
And Advent must also inform the Ministry of Defence if it wants to sell all or even just part of Cobham.
Advent offered to buy Dorsetbased Cobham for 165p-per-share in July. Although the company’s board urged shareholders to back the deal, it attracted fierce resistance from the founding Cobham family, Tory grandees such as Lord Heseltine and senor military figures, including former navy chief Admiral Lord West.
They warned the price tag was too low and the deal would rob Britain of key defence capabilities. They also slammed the private equity business model, which usually means companies are broken up or sold on within five years of being taken over.
Cobham was founded in 1934 by long- distance flight pioneer Sir Alan Cobham and has a rich history of developing key defence technologies such as air-to-air refuelling. Leadsom ( pictured) launched a surprise intervention in September after 93pc of investors backed the deal when she asked the Competition and Markets Authority (CMA) to conduct an investigation into the takeover.
The latest announcement comes around three weeks after the CMA delivered its report to Leadsom. A heavily redacted version of the report was published for the first time yesterday.
It revealed that the Ministry of Defence, Home Office and a number of unnamed third parties believed there were significant security concerns around the takeover. This contrasts with what Cobham management had said early on in the process, when they insisted it did not pose any security threats.
The Home Office flagged that Cobham is a ‘key supplier of radio devices to the UK’s emergency services and other UK authorities’, which could be put at risk by the deal. And the Ministry of Defence also raised a number of concerns – though many of these were redacted.
Lady Cobham, 76, daughter-inlaw of the founder, said: ‘In waving this deal through, the Government is doing long-term damage to our defence manufacturing base and the operational independence of the UK military.’
Cobham chief executive David Lockwood said: ‘This is a significant milestone and an important step towards providing greater clarity for Cobham’s employees and customers.’