The £2.6bn takeover of British defence manufacturer Ultra Electronics by a US private equity firm looks set to be waved on by the UK government after the Department for Business said it was minded to accept the deal.
Cobham last year launched a takeover of Ultra Electronics, which makes systems such as sonar and radio communications used by military and civilian aircraft. Cobham itself was controversially taken over and broken up by US private equity investor Advent over 2019 and 2020.
Business Secretary Kwasi Kwarteng announced after markets closed on Thursday that he was “minded to accept undertakings offered” by a Cobham/Advent investment vehicle to address national security concerns.
The government stepped in last August over security concerns around the deal. Under the terms published on Thursday, Cobham will have to create two “SecureCos” to house “sensitive capabilities” with the government holding a seat on each.
It will also have “step-in rights” allowing ministers to take control of the SecureCos on national security grounds.
Kwarteng said this would be like a “special share” it already holds in key UK defence manufacturers BAE Systems and Rolls-Royce, allowing it to reject strategy changes.