Admiral warns: Don’t surrender to private equity
Sell-offs could leave Britain at the mercy of Russia and China in submarine warfare
BRITAIN could be left at the mercy of Russia’s and China’s navies if Ultra electronics is sold to Advent International, military officials have warned.
the former head of the Royal Navy, Admiral Lord West, has said the defence company’s technology could be at the very heart of the ‘survival of the nation’ as submarine warfare is set to become the next major theatre of war.
American private equity behemoth Advent has said it is keen to buy Ultra in a £2.6bn deal, though it has not yet made a formal offer. But the approach has already caused uproar, and Business secretary Kwasi Kwarteng is tracking the talks closely, signalling he could intervene.
If Ultra is sold to a private equity group, the industry fears the UK could lose access to some of its pioneering products. Private equity firms often sell on businesses to other companies – as Advent did with Cobham, which it bought in a controversial £4bn deal last year. this could close Ultra’s technology off from the UK military.
the latest warning about what the loss of Ultra could mean for the UK comes as analysts at JP Morgan have said other Ftse250-listed defence groups could also be takeover targets.
QINETIQ, Babcock International and senior all fit into a category of companies that have ‘attractive niches and/or low valuations’.
this would rob the Ftse 250 of virtually all its defence groups and mean investors would have few opportunities beyond giants such as BAE and Rolls-Royce.
Ultra makes sonobuoys – hi-tech floating devices that are dropped into water to listen for sounds emitted by submarines. this technology is becoming vital as tensions with the Russian and Chinese navies have escalated. Britain’s flagship aircraft carrier HMS Queen elizabeth was targeted by Russian submarine monitoring in the Mediterranean in June. In the south China sea, China has also been stalking foreign vessels. Lord West (pictured) said: ‘It is absolutely crucial for the security of us and Nato that we don’t lose the edge with anti-submarine warfare.
‘the anti-sub battles, when it becomes a battle, is going to be right up there as probably the most important one – this relates to the survival of the nation. the technology could protect our nuclear submarines and undersea cables. We must not lose those capabilities.’
Aerospace analyst Francis tusa said: ‘War is migrating under the sea and anti-submarine warfare is now arguably the growth area.
‘When it comes to anti-sub warfare it is not just a “nice to have” - it is essential. At the moment a UK-owned Ultra means the Royal Navy and some of our allies have good access to some of the best technology. If it sells to a Us private equity firm we have no idea where it’s going to end up. Ultra is a world leader, so why do we want to see it leave UK hands?’