Kwasi urged to put brakes on Ultra deal
KWASI Kwarteng is under pressure to launch a fullblown investigation into the private equity takeover of Ultra Electronics.
The Business Secretary will be handed a report today that outlines whether the controversial £2.6bn deal will threaten national security.
Kwarteng, who ordered the review last August, will decide whether to wave it through as it stands, approve it with conditions attached, or refer it to a deeper ‘phase two’ probe.
The proposed takeover of a major British defence group by US buyout firm Advent International has provoked uproar among military figures, politicians and analysts.
Whitehall sources said the decision will hinge entirely on the contents of today’s report by the Competition and markets Authority (CmA).
Phase two interventions are rare. But the Business Secretary is facing calls to step up scrutiny of the deal because of Ultra’s role making highly sensitive naval kit – including enemy submarine-hunting sonobuoys. Last night the former head of the Royal Navy, Admiral Lord West, said: ‘I think it should be referred to a phase two investigation.’
he believes it is ‘absolutely critical for the security of us and Nato that we don’t lose the edge with anti-submarine warfare’. Critics of the deal say losing Ultra to a US private equity firm could put Britain at a disadvantage as submarine warfare becomes a more important theatre of conflict.
Advent is conducting the deal through Cobham, a British firm it bought for £4bn in 2019. Advent’s reputation took a hit after it chopped up and sold more than half of Cobham within 18 months of buying the business, despite promising to be a long-term investor.
Defence analyst Francis Tusa said: ‘I really think it should be referred. It’s not being bought by a British firm. It is being bought by an American firm that skinned the Cobham pelt and put it on to look British.
‘If it was American it would not be allowed to go through.’
Today is the deadline for the CmA report. It will be published online at some point in the coming months.
Laws came into force early this month that will automatically trigger Government investigations into takeovers or asset sales in 17 strategic industries, including defence, nuclear and artificial intelligence. But, because the review was kicked off last year, the 3500p per share deal for Ultra is being evaluated under the Enterprise Act of 2002.
If the takeover is allowed under the Enterprise Act, it could still be called in at a later date to be reviewed under the National Security and Investment Act, which can be used retrospectively.
A Government spokesman said: ‘While the Government welcomes foreign investment, it is right that we fully consider the national security implications of this transaction.’