Kwasi hit by backlash over defence deals
As Business Secretary clears way for ANOTHER foreign takeover . . .
KWASI Kwarteng faced a mounting backlash after he cleared the way for the second foreign takeover of a British defence firm in a week.
The Business Secretary said he was ‘minded to accept’ the £6.3bn acquisition of Coventry- based meggitt by US industrial conglomerate Parker Hannifin.
The move came less than a week after he supported the £2.6bn takeover of ultra Electronics by US private equity group Advent International, which also bought Cobham in 2020 for £4bn.
The prospect of another UK defence firm falling into the hands of an overseas buyer drew a swift backlash from Conservatives concerned such sales will jeopardise national security.
Former Tory leader Sir Iain Duncan Smith said he was ‘utterly against’ the meggitt takeover.
meggitt, which has 9,000 staff, including 2,300 in the UK, makes parts for RAF fighter jets including the Typhoon and F-35 as well as for passenger aircraft made by Boeing and Airbus. Rival ultra makes parts for nuclear submarines and kit to hunt submarines.
The sale of a third strategically important UK firm – satellite maker Inmarsat – also looks set to be approved.
Tory grandee lord Heseltine, a defence secretary under margaret Thatcher, fumed: ‘no other country in the world of which I’m aware allows its technology base to be taken over by foreign companies.’
labour shadow business secretary Jonathan Reynolds said the Government needed to ‘secure assurances on protecting British jobs, technology and future investment in the UK’.
He added: ‘ Yet again we are seeing great British firms being sold to overseas buyers, raising questions about our long-term resilience and strategic capabilities. We need an industrial strategy that promotes and protects our fantastic defence industries.’
Kwarteng’s tentative approval of the meggitt deal came after Parker Hannifin offered to honour existing contracts with the ministry of Defence as well as ensuring most of the company’s board were UK-BASED and that some of its military technology would be kept in Britain.
But these are unlikely to assuage concerns the Government is overseeing the hollowing out of the UK defence industry.
After last week’s decision to back the takeover of ultra, Tory MP Bob Seely, a member of the foreign affairs select committee, said a ‘ balance’ was needed between ‘being an attractive and open economy on one hand, and protecting intellectual property, our industrial base and sensitive defence firms on the other’. He said he was ‘not sure’ the UK had the balance ‘quite right yet’. Kwarteng is under pressure to block the takeover of satellite company Inmarsat by US-BASED Viasat after shareholders backed a £5.6bn buyout this year.
Criticism about the purchase of British defence firms by foreign buyers has grown following the £4bn swoop on Blackburn-based Cobham by Advent in 2020, a move which led to a break-up of the historic group.
Fears ultra could share the same fate rose after it emerged Advent was drawing up plans to break it up if a takeover is signed off. The Government can block takeovers on national security grounds under the national Security and Investment Act which was enacted this year.