UK may approve acquisition of defence firm Ultra by rival Cobham
29 Jun 2022
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Britain is moving ahead with the process of approving the acquisition of London-listed defence firm Ultra Electronics by rival Cobham, which is owned by US private equity firm Advent, discounting security concerns over the planned transaction.
Britain had initiated an inquiry into the deal in August last year over possible national security risks after the UK government's secretary of state for business, energy and industrial strategy Kwasi Kwarteng intervened citing national-security issues.
The UK government had initiated an inquiry into the deal in August last year over possible national security risks, even as Cobham committed to allaying any potential concerns.
But, Kwarteng said late Thursday that he is minded to accept Cobham's proposed legally binding undertakings to address public interest concerns over national security, instead of referring the deal to a phase 2 enquiry.
The UK government has started a consultation process over the 2.57-billion-pound ($3.14 billion) deal, following advice from the ministry of defence, and the undertakings offered by Cobham to address the concerns.
Boston-based Advent International has pledged to split Ultra Electronics into two separate legal entities should the deal go ahead.
The aim will be to have a government-appointed director to protect British national security interests, and report back to officials if the company attempts to sell back services important to the defence sector.
Britain will, however, maintain the right to seize back control of the company’s important operations if deemed necessary, if a breach into security practices occurs.
Ultra Electronics is a manufacturer of sonar and radio communication systems used by navies and air forces whose clients include the British and the US governments.
The UK government said that the Business Secretary will not take any decision until the conclusion of the consultation, which is until midnight of 3 July, and until after considering representations.
The acquisition of Ultra Electronics, a firm specialising in vital equipment for nuclear submarines, comes after US officials threatened to tone-down defence cooperation with Britain if the deal was blocked.
