Stop the Cobham sellout

AMID the high drama of Brexit, the attention of government is almost wholly diverted. But it would be a catastrophe if the country woke up on October 31 and found that while the politicians have been tying themselves up in knots, great chunks of British commerce have gone walkabout.

Under immediate threat is aerospace pioneer Cobham.

The goal of private equity buyer Advent is that by the time the votes on its £4bn bid are counted on September 16, its £4bn offer for Cobham will be home and dry.

Only the vulnerable workforce at Wimborne in Dorset may have noticed. One only has to look at sackings at Cadbury in Slough or GKN at Redditch to know the fate of headquarters’ staff.

The duty of government is to test the wisdom of takeovers, especially those affecting the UK’s national security. Critics of the deal are right to point out that the UK’s armed forces could be weakened if Cobham ends up in the wrong hands.

The British aerospace group is streets ahead of competitors in its core flight refuelling technology but also has a bold record in avionics and space exploration. It is inconceivable that a deal involving sensitive defence technologies in the US or in mainland Europe would be nodded through without full scrutiny.

Business Secretary Angela Leadsom and Defence Secretary Ben Wallace have been disappointedly quiet. Between them they have the powers needed under the 2002 Enterprise Act to intervene on national security grounds. Irrespective of whether the price is right, they need to consider what private equity ownership means for the Tory industrial strategy and whether the UK’s technological edge might be diminished.

There have been suggestions that the business department will follow procedures used in the contested Melrose takeover of GKN and seek stipulations on future Cobham ownership. But it is a very different thing enforcing conditions imposed on a quoted UK enterprise such as Melrose and a private equity buyer which operates secretly.

The whole purpose of Advent’s financial ownership is short-term gains, and that does not augur well for the safeguarding of R&D, patents and national security. Investors almost certainly are being sold short because of the failure of chairman Jamie Pike and the Cobham board to go through a thorough sales process rather than genuflect in front of the first buyer.

Most worrying is the prospect of the UK’s aerospace sector and national security being sold down the river.

Left bank

AFTER the bump in provisions for payment protection insurance (PPI) at Royal Bank of Scotland and CYBG, there was bound to be a hiding for Lloyds and Barclays.

But no one quite saw a value-destroying £1.2bn to £1.8bn of new provisions coming along at Lloyds. It received a mind-boggling 600,000 to 800,000 PPI inquiries a week in August, way above the expected 190,000 as official advertising was ramped up.

This may be terrific for customers but is a huge blow to Lloyds investors who have suffered enough. The cost of wrongful selling by Lloyds has hit £21.9bn since 2011, destroying the long-term recovery in the value of the bank. That dwarfs the pre-tax profit of £15.2bn earned at the bank between 2011 and 2018. Yet no one has been held responsible for what is the single most expensive marketing error ever made by a British bank.

As a result of the latest onslaught, the rest of the promised share buyback is being axed. With Barclays also in for a bill of £1.2bn to £1.6bn, it is hardly a surprise that a decade after the financial crisis UK bank valuations still lag those of American counterparts. All further grist to the mill for Labour’s John McDonnell, who has his eyes on excessive bankers bonuses.

Atlantic braves

NORTH America is strewn with the detritus of British retailers who mistakenly thought a common language meant easy pickings.

Among the casualties have been Dixons, M&S and most recently Tesco.

So how encouraging that Associated British Foods’ retail arm Primark looks to be making progress. Its newest opening in hipster Brooklyn is trading strongly. Next in line is a store in Philip Roth country in New Jersey, followed by The Sawgrass Mills mall in the Miami area of Florida and State Street, Chicago. Way to go . . .