Lady Cobham: We MUST keep British defence firms out of foreign hands
As probe into sale of tech firm steps up, family behind jet pioneer sounds alarm
THE founding family of defence giant Cobham has raised the alarm over a flurry of sensitive deals as the Government prepares to escalate its probe into the sale of Ultra Electronics. Lady Cobham, the daughter-in-law of founder Sir Alan Cobham, has warned against ‘auctioning off’ high-tech firms Ultra, Inmarsat and Meggitt in the wake of the invasion of Ukraine.
The deals are being closely monitored on both sides of the Atlantic. Decisions on the trio of aerospace and defence takeovers are expected later this year and are being investigated by Kwasi Kwarteng’s Business Department.
However, The Mail on Sunday understands Ministers are considering closer scrutiny of the planned purchase of Ultra by US private equity firm Advent. The ‘phase two’ investigation on whether the deal would threaten Britain’s national security could deal a hammer blow to the £2.6billion takeover.
Ultra is regarded as a strategically important company because of its work, which includes making enemy submarine-hunting sonobuoys.
Cobham was the first in a succession of deals targeting some of Britain’s most cutting-edge firms. The activity has attracted the ire of the likes of former Defence Secretary Michael Heseltine and the one-time head of the Royal Navy, Admiral Lord West.
Critics want the Government to use its powers to block more deals on national security grounds. They are particularly concerned that private equity firms take ownership only for a few years, before selling businesses on again.
Advent is buying FTSE 250-listed Ultra through what remains of its Cobham business.
But Lady Cobham told The Mail on Sunday ‘no one should be taken in’ by the fact Cobham is fronting the takeover – as the ultimate owner is a private equity firm.
‘They sold off most of Cobham within 18 months of buying it, and are bound to do the same to Ultra if the Minister waves this through,’ she said. ‘The threat from Russia and China is growing and we should be investing in our domestic defence capability, not auctioning it off.’
The Mail on Sunday previously revealed that Advent had agreed to set up a separate board of directors solely to oversee Ultra’s contracts with the UK Government, to ease national security fears.
Undertakings thought to have been secured by Kwarteng, who swiftly intervened in the deal when it was announced last year, include maintaining Ultra as a standalone entity that cannot be merged with Cobham. It is believed Advent initially wanted to merge the two, then float the enlarged group within a couple of years. Kwarteng is thought to be concerned by a threat from US authorities to limit defence cooperation with Britain if it blocks the Ultra takeover.
But talks are believed to have stalled over proposals to install a Government appointee on the board.
Despite pledging to be a longterm investor in the company, which pioneered air-to-air refuelling technology, Advent carved Cobham up and sold much of it off within 18 months. The Government had secured a range of guarantees, including a promise to keep the UK headquarters and to alert the Government if it planned to sell off parts of the business. But campaigners, including the Cobham family, say that failed to protect it. Foreign suitors have also swooped on fellow defence and aerospace firm Meggitt and satellite group Inmarsat.
US aerospace giant Parker-Hannifin is set to buy Meggitt for £6.3billion and another US firm, Viasat, is poised to pick up Inmarsat for £5.4billion. Business Secretary Kwasi Kwarteng called in the Ultra and Meggitt deals last summer and is investigating both under the old Enterprise Act.
The Inmarsat deal is being scrutinised under a new law, the National Security and Investment Act, which hands Ministers sweeping powers to investigate tie-ups and investments in 17 sensitive sectors.
An Advent spokesman said: ‘Advent is committed to backing the Government’s national security imperatives, with over £500million invested in Cobham’s research and development and strategic initiatives during our ownership, and all defence asset disposals kept within the Five Eyes community of our closest allies.’
A Viasat spokesman said it was ‘committed to invest heavily in its UK business’.