Cobham Leadsom intervenes in takeover of defence supplier Cobham
National security cited after investors accept offer from America’s Advent
The government has intervened in the £4bn takeover of Cobham, a UK aerospace and defence supplier, by a US private equity firm on the grounds of national security.
Andrea Leadsom, the business secretary, has instructed the Competition and Markets Authority to investigate the takeover of Cobham, a world leader in systems for planes to refuel in mid-air, by Advent International.
Leadsom said: “Following careful consideration of the proposed takeover of Cobham, I have issued an intervention notice on the grounds of national security. The government’s goals are to support private sector innovation whilst safeguarding the public interest.”
Shares in Cobham fell more than 1% in early trading following the minister’s announcement. Leadsom, who was appointed business secretary by Boris Johnson in July, has told the CMA to report back by 29 October.
Shareholders on Monday approved the sale of Cobham, established 85 years ago by the aviation pioneer Sir Alan Cobham, against the wishes of the founding family. The deal, announced in July, is one of a series of foreign takeovers of UK companies made attractive by the weak pound.
When the takeover was unveiled it was seen as a test of the new government’s tolerance of foreign takeovers as the UK seeks to define its role post-Brexit. Advent believed that the deal would overcome national security hurdles because Cobham is a small supplier to the Ministry of Defence.
Cobham employs about 10,000 people, including 2,000 in the UK, and operates in more than 100 countries. The company supplies radar and other electronic products for the defence and aviation industries, including the mid-air refuelling technology that gave RAF planes the range they needed to help Britain win the 1982 Falklands war.
The takeover was opposed by some shareholders, opposition MPs and Nadine Cobham, the widow of Sir Alan’s son. After shareholders approved the deal, she called on Leadsom to step in to protect the business. Advent had said it would review Cobham’s businesses, suggesting a breakup of the company was the likely outcome of its investment.
Cobham has only recently steadied itself after five profit warnings between 2015 and 2017 and critics have accused Advent, one of the biggest US buyout firms, of snapping up the company cheaply as it recovers. Its chief executive, David Lockwood, said he regretted the sale when the company was showing signs of revival.
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