English aerospace company Cobham has agreed to buy fellow UK rival defence company Ultra Electronics after agreeing to a £2.6 billion (€3.05 billion) takeover deal following several weeks of deliberations.
Cobham aerospace. Credit: Ryan Fletcher / Shutterstock
A Cobham VH-NJZ taking off from Adelaide Airport. Credit: Ryan Fletcher / Shutterstock
The purchase, which caused both parties to agree to a 3,500p per share deal, led to national security concerns from Business Secretary Kwasi Kwarteng, but Cobham's owner has promised to safeguard UK jobs and "protect national security" in an attempt to allay any fears the government may raise over the acquisition.
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Cobham issued a statement to the London Stock Exchange on Monday morning saying it would "invest in Ultra’s UK workforce by protecting existing and creating new UK manufacturing and engineering jobs and apprenticeships and maintaining a UK headquarters”.
It added it “recognises the specific importance of Ultra’s contribution to the UK’s economy and national security”.
The company is noteworthy owing to its pioneering of air-to-air refuelling techniques. Its acquisition by US equity firm Advent in 2020 introduced it to the private sector.
It added it would seek to work with officials to ensure the deal does not hinder Ultra's current commitments, provided any terms of the deal are not vetoed by shareholders and open a forum to enable “ongoing dialogue, co-operation and monitoring” to ensure transparency for the deal, the company claims.
However, the UK government says it will continue to monitor the situation, with Kwarteng reportedly launching a national security investigation under the Enterprise Act - a law protecting fair competition for UK businesses in the face of acquisitions.
Under the law, he could theoretically intervene in mergers and acquisitions in case of a national security threat.
Ultra provides a number of useful services to the UK government, such as radar tech for the Royal Navy or control systems for Trident - the country's nuclear arsenal.
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The company's shareholders are set to receive £35 per share, in line with the price announced in July, up from an initial offer of £28 per share.
The deal will help Cobham break into the maritime defence market.
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