Boris faces crucial test in the battle for Cobham: Blocking £4bn deal would signal major shift
Boris Johnson’s Government faces a crucial test of its attitude towards foreign takeovers following a dramatic intervention in the £4billion battle for British defence firm Cobham.
Business Secretary Andrea Leadsom yesterday ordered an investigation into the deal, to determine whether it poses a threat to national security.
If the Government decides it does, it has the power to block the sale to US private equity group Advent International.
Security fears: Cobham makes parts for war planes including the F-35 (pictured) and the International Space Station
When Theresa May became prime minister three years ago, she said protecting British companies from foreign predators was one of her ambitions.
However, no deal has ever been blocked on national security grounds by the Government.
The ruling on Cobham will give a clear indication of Johnson’s attitude to foreign takeovers at a time when it is under pressure to show that Brexit Britain is open for business.
Business Secretary Andrea Leadsom yesterday ordered an investigation into the Cobham deal
Julian Lewis, chairman of the defence committee, said: ‘This could be an indication of a change of attitude by the Government towards the UK’s defence industry.
It could mean ministers are beginning to think about the UK’s defence requirements, and not just global commercial considerations.’
But analysts at Berenberg predicted the deal would go ahead, saying they did ‘not believe a UK national interest review will jeopardise the closing of this transaction’.
Lady Cobham, who is the daughter-in-law of founder Sir Alan Cobham, said that the Government had listened to ‘widespread concerns about this takeover offer and the risk it poses to high-tech jobs and our national security’.
She added: ‘It is a relief to hear that Andrea Leadsom is going to refer this takeover, and I’m grateful she should find time to look into this important issue during a time of political turmoil.’
The Government intervention comes days after Cobham shareholders voted overwhelmingly in favour of the buy-out offer put forward by Advent.
But opponents of the deal, led by 76-year-old Lady Cobham, have slammed the deal as ‘disastrous’, arguing it poses a threat to national security and could rob Britain of access to key defence technology.
Before Monday’s vote, Lord Heseltine, who was a defence secretary under Margaret Thatcher, told the Mail that ‘no other country in the world’ would allow a sensitive takeover such as Cobham’s to pass without in-depth scrutiny.
Former boss Gordon Page has said the 165p-per-share offer meant the board was ‘giving the company away’, while former head of the Navy, Admiral Lord West, has blasted it as ‘strategic madness’ for Cobham’s key technologies to slip out of British hands.
The company has about 10,000 staff, of which 1,700 are in Britain. The 85-year-old firm is best known for pioneering technology that allows planes to refuel in the air. But it also makes parts for war planes and the International Space Station.
Cobham’s chief executive David Lockwood has dismissed worries that the takeover poses a threat to security and described opposition to the deal as ‘noise’ that the company is ignoring.
The Competition and Markets Authority (CMA), the body which assesses takeovers, has until October 29 to carry out a review and report back to Leadsom.
She can then decide whether to block the takeover, order a more in-depth probe – known as a phase two investigation – or wave it through.
Cobham said: ‘We welcome the opportunity to clarify Cobham’s activities in the context of UK national security and to assuage the concerns that have been expressed by certain shareholders and via the media.
The CMA review is a matter for the Government, and we will assist with it in every way possible.’
Advent said: ‘We will continue to engage with the UK Government in this part of their review.’