The Government has launched an investigation into the £4 billion takeover of UK aerospace giant Cobham by a US private equity company on “national security grounds”.
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.
The sale of the business was backed by investors despite bitter opposition from Lady Nadine Cobham, whose late husband Michael ran the business, who called for the Government to step in.
Mrs Leadsom said the Government wants to “support private sector innovation whilst safeguarding the public interest”.
In a statement, she said the Competition and Markets Authority (CMA) has until October 29 to report back to her regarding the impact of the acquisition.
Secretary of State @beisgovuk, Andrea Leadsom, has asked us to investigate Advent's takeover of defence and aerospace group, Cobham.
— Competition & Markets Authority (@CMAgovUK) September 18, 2019
She said: “Following careful consideration of the proposed takeover of Cobham, I have issued an intervention notice on the grounds of national security.
“As part of the statutory process, the CMA will now investigate and carry out a review on the national security implications of the transaction.”
After the regulator reports back to Government, it will be for the Business Secretary to decide whether the deal is in the public interest, or if a further phase two investigation should take place.
Lady Cobham said: “I’m delighted that the Government has listened to the widespread concerns about this takeover offer and the risk it poses to high-tech jobs and our national security.
“I look forward to seeing the CMA’s assessment.”
Cobham employs around 10,000 people, including 1,700 in the UK, and is best known for its air-to-air refuelling technology.
It became the target of takeover interest after its share value slumped on the back of a raft of profit warnings and contract disputes.
At a meeting on Monday, Advent’s 165p per share offer to take the business private was accepted by 93% of investors, surpassing the 75% threshold needed to pass the move.
Shortly after losing the vote, Lady Cobham said shareholders had joined directors in running up the “white flag” over the company and renewed her calls for intervention.