Cobham, the private equity-owned aerospace and defence group, has agreed to buy rival Ultra Electronics for £2.6bn in the latest takeover of a UK engineering specialist.
Cobham’s owner, the US private equity group Advent International, has promised to safeguard UK jobs and protect national security in an attempt to allay government concerns about the deal.
Ultra provides critical technology to the UK government, including submarine-hunting and sonar equipment for the Royal Navy, control systems for the UK’s fleet of Trident nuclear missile submarines and components for F-35 fighter jets.
Under the terms of the deal, Ultra shareholders will receive £35 a share as well as an interim cash dividend of 16.2p due next month, valuing the company at £2.57bn. The price is a 63 per cent premium to Ultra’s closing price on June 24 before the first bid from Cobham, at £28 a share.
Cobham said it “recognises the specific importance of Ultra’s contribution to the UK’s economy and national security”.
It said it would engage with the government and offer “legally binding and enforceable commitments” on Ultra, including “appropriate protections for sovereign UK capability, continuity of supply and critical capabilities in the UK”.
It added that it would establish a “forum” with government representatives to enable “ongoing dialogue, co-operation and monitoring” and ensure UK authorities had “full visibility of Cobham’s delivery of the commitments”.
Although agreed by both companies, the deal is likely to add to concerns over the vulnerability of UK defence and engineering companies to takeovers.
Meggitt, another British aerospace and defence specialist, published terms of its £7.1bn takeover by US group Parker Hannifin on Monday. Meggitt is also waiting for details of a possible rival bid from TransDigm, another US aerospace company. The UK Takeover Panel has given TransDigm until September 14 to make a firm offer.
UK business secretary Kwasi Kwarteng is said to be “actively interested” in both the Ultra and the Meggitt takeovers but no decision to intervene has yet been made. A formal national security review into any deal could take some months.
Under the Enterprise Act 2002, the business secretary can intervene in mergers and takeovers on grounds of national security, financial stability and media plurality. A broader set of national security and investment rules comes into force in January 2022.
Advent’s acquisition of Cobham last year sparked a political outcry. The government eventually agreed the deal could happen with official promises of tight scrutiny. Within 18 months of taking control, Advent had sold more than half the assets it bought by value.
Shonnel Malani, chair of the Cobham group, said the company recognised the “important role that a combined Cobham and Ultra will play in ‘five-eyes’ defence and are committed to protecting the continuity of supply to the UK and our allies”.
Tony Rice, Ultra’s chair, said the company was “comfortable that [Advent’s] stakeholder commitments plus legally binding undertakings” to the government “will protect stakeholder interests”.
https://news.google.com/__i/rss/rd/articles/CBMiP2h0dHBzOi8vd3d3LmZ0LmNvbS9jb250ZW50Lzg3ZmUyYjlmLWE1NTEtNDljYS05NjI0LWMyOWYzZTVmYTljNNIBP2h0dHBzOi8vYW1wLmZ0LmNvbS9jb250ZW50Lzg3ZmUyYjlmLWE1NTEtNDljYS05NjI0LWMyOWYzZTVmYTljNA?oc=5
2021-08-16 08:27:15Z
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