The government has been accused of “cynically timing” the announcement of the £4 billion sale of a UK defence and aerospace company to a US private equity firm “to avoid scrutiny”.
The deal had been delayed over national security concerns but business secretary Andrea Leadsom released a statement just before 10pm on Friday night approving the sale of Cobham to Advent International.
The Dorset based firm employs 10,000 people and is regarded as a world leader in technology for air-to-air refuelling and has extensive contracts with the British military.
Advent’s £4 billion offer to buy the company was made in July and approved by shareholders in August but the government intervened to delay the deal in September after national security concerns were raised.
‘Government is not taking back control so much as handing it away’
Lady Nadine Cobham, a member of the company’s founding family described the decision as “deeply disappointing” and said the announcement was “cynically timed to avoid scrutiny on the weekend before Christmas.”
Lady Cobham added: “In one of its first major economic decisions, the government is not taking back control so much as handing it away.”
The former Royal Navy chief Admiral Lord West was among those who expressed fears about the sale of the British defence company to a US private equity firm earlier this year.
Defence analysts said Cobham’s expertise in air-to-air refuelling was essential to defence and modern warfare and selling it could have implications for national security. Cobham also provides communication systems for military vehicles and its innovations include radar technology for maritime defence, tanks and spacecraft technology.
The competition regulator’s report on the proposed takeover of Cobham was heavily redacted but one passage said there was “a risk that the institutional framework and safeguards required by the government’s security framework may be undermined” if the deal went ahead.
Sensitive government information
Leadsom’s late Friday night statement said the decision to allow the sale had been “meticulously thought over” and followed advice from the defence secretary, deputy national security adviser and government officials across multiple departments that left her satisfied the risks had been identified and addressed “to an acceptable level”.
She added that exisiting contracts would be honoured and that sensitive government information would continue to be protected.
Prime minister Boris Johnson said “it’s very important that we should have an open and dynamic market economy” and added: “A lot of checks have been gone through to make sure that in that particular case all the security issues that might be raised can be satisfied and the UK will continue to be a very, very creative and dynamic contributor to that section of industry and all others.”
‘Takeover would never be approved by other nations’
Cobham was founded in 1934 as Flight Refuelling Ltd by Sir Alan Cobham and the family retained a large stake after it was floated on the stock market in 1985. Sir Alan’s daughter-in-law Lady Cobham said of the company’s sale to the US company: “In Cobham we stand to lose yet another great British defence manufacturer to foreign ownership, through a takeover that would never have been approved by the Americans, French or Japanese, all of whom have taken steps recently to raise protections for their own defence sectors.”
The chief executive of Cobham, David Lockwood said: “We are grateful to the secretary of state for her diligent handling of the process over the last few weeks and the certainty she has delivered for all stakeholders, most importantly our employees, before the Christmas break.”
Advent said they have offered long term assurances as part of the deal.