Cobham's £4bn U.S. takeover faces national security investigation

Andrew Cummings
September 20, 2019

On 25 July 2019, Cobham, a United Kingdom defence company, announced that it had agreed an arrangement to be taken over by a subsidiary of Advent International, a U.S. private equity firm, in a deal worth approximately £4 billion.

Business Secretary Andrea Leadsom has called on the competition watchdog to intervene and assess the security implications of Cobham's sale to Advent International, which was approved by shareholders on Monday.

Leadsom has issued a European intervention notice, calling for a report from the British Competition and Markets Authority (CMA) by October 29 to determine whether Cobham, the maker of air-to-air refueling equipment, should be sold.

Mrs Leadsom acknowledged the Govt wishes to "give a enhance to non-public sector innovation while safeguarding the public hobby".

Cobham's pioneering air-to-air refuelling technology is used on all western fast jets but it is also a key supplier of components for the F-35 fighter and to the USA military's electronic warfare and radar capability.

The sale of the business was backed by investors despite bitter opposition and calls for Government intervention from Lady Nadine Cobham, whose late husband Michael ran the business for over 20 years.

Cobham Chief Executive David Lockwood said on Monday that requirement would disappear under Advent ownership, enabling the group to combine infrastructure and share knowledge more quickly and easily within the company.

Meanwhile, a spokesperson for Advent, said: 'Advent is committed to being a responsible steward of Cobham, encouraging its future growth and success.

It said it will "continue to engage constructively and cooperatively with the UK Government in this part of their review".

Cobham shares were down 0.6% at 159.50p at 0850 BST. The share price had crashed over 60% from its peak in 2015 prior to Advent's bid in July.

'I think the risk of the government preventing the deal going through is higher than the market is indicating.

It grew to became the scheme of takeover hobby after its portion worth slumped on the attend of a raft of earnings warnings and contract disputes.

"It would be a national disgrace if this deal is allowed to sail through without any government intervention", Lady Cobham, the daughter-in-law of Sir Alan said.

Earlier this week, it emerged that the Treasury could block the Hong Kong stock exchange's proposed takeover of London Stock Exchange.

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