Sell-out of a British icon
BUSINESS Secretary Andrea Leadsom and Boris Johnson have miserably failed the national interest by nodding through the £4bn acquisition of aerospace pioneer Cobham by US private equity firms Advent and Blackstone.
An effective opposition, which genuinely cared about British jobs, R&D and the UK’s place as a centre of excellence, would be screaming from the rooftops about the injustice.
Some very effective lobbying by powerful Tory interests clearly persuaded Leadsom and Downing Street that they could get away with this.
Not only does this deal pose a threat to national and domestic security, it also allows a UK firm to fall into unsafe hands.
As the national security review revealed, Advent has no history in defence and national security at all.
It might also have noted that the private equity model is built on cheap, often unsecured debt, and minimum disclosure.
The Government’s willingness to trust Cobham to private equity might have been more convincing had it put in place watertight stipulations. The reality is that
Advent’s advisers have managed to negotiate weaker undertakings than those agreed by UK-listed Melrose when it bought British engineer GKN in 2018.
Anyone who thinks the opposition to the Advent bid is a row confected by the dogged family interests of Lady Cobham, needs to read the Competition & Markets Authority (CMA) report into the deal delivered on October 29, and just released. Actually, it is quite hard to read as the juicy bits have been redacted on national security grounds.
The findings are unequivocal. Cobham, it notes, operates across the communications, advanced electronic systems and aviation services sectors: ‘Those supply chains are particularly relevant to national security.’
This statement is followed by another chunky paragraph of redacted material. So what stands between the UK and its allies’ secrets being betrayed?
Advent is to create an advisory board to scrutinise future transactions and give the Ministry of Defence notice if it chooses to sell parts, or all, of Cobham to anyone else.
This rigmarole would be totally unnecessary if the flaccid Cobham board, headed by Jamie Pike, and a weak-kneed, complicit Government, had shown real steel.
Spanish practices
CROSS-BORDER bank takeovers are fraught with risks.
British taxpayers are still paying the price for Royal Bank of Scotland’s disastrous takeover of the Dutch ABN Amro.
One might have hoped lessons had been learned by 2015 when challenger bank TSB was swallowed by Catalonia’s Sabadell as it sought an escape route from nationalism.
Even before Sabadell secured control, it was boasting about superior technology.
This reckless confidence was the tainted prize brought to TSB.
Then chief executive Paul Pester and the TSB board were only too willing to extricate themselves from an expensive IT contract with Lloyds and substitute it with Sabadell tech.
As the Slaughter and May report says, directors lacked ‘common sense’ in the way the transfer was handled. The document pins the blame for the foul-up on one hapless official, Carlos Abarca, who allegedly failed to keep the TSB board informed.
Maybe, but a probing board, less concerned about trimming IT costs, would never have approved an overnight migration on the say so of one individual.
At the same time, the Financial Conduct Authority was more concerned about the transfer of Barclays customer sort codes to a new ring-fenced, domestic bank than what was going on at TSB.
It would be unconscionable if arrogant executives of the Spanish owners escape without punishment from a scandal which caused untold misery to abused and defrauded TSB customers.
Same old...
JOHN McDonnell’s latest radical pledge is to rewrite the Companies Act so that directors promote the long-term interests of employees, customers and the environment.
Perhaps someone could take McDonnell aside and refer him to Section 172 of the 2006 Act, which obliges directors to take into account a diverse range of stakeholders when promoting the success of the company. Among interests to be looked after are employees, suppliers, customers, the community and environment. QED.