Serious questions are being raised by the sale of defence firm Ultra Electronics to US-backed Cobham Group. Criticism states the Boris Johnson-led government is taking a “weak” stance on overseas takeovers of UK businesses. Board of Ultra, which supported coalition forces in Afghanistan, said on that it had agreed a £2.6bn takeover with US-owned rival Cobham Group at £35 a share, more than 40 per cent higher than the company’s all-time record share price.
Owned by the US private equity firm Advent since a £4bn deal in 2020, Cobham said the combined company would play a “mission critical” role in defence and security for the “five eyes” network of intelligence allies - the UK, US, Australia, Canada, and New Zealand. It offered binding commitments to the UK government in an attempt to get some leverage for the deal, including protection of sovereign defence capabilities, funding of the company’s pension scheme and investment in the UK.
However, Cobham has also stated that it could sell Ultra’s forensics and energy businesses, while “limited numbers” of jobs, mostly linked to the firm’s stock market listing, may be lost. While the government has said it will “closely monitor” the Ultra deal, Labour’s shadow business minister Chi Onwurah said ministers “should be doing far more than making weak and vague noises to protect (companies like Ultra).” She said, “Serious questions remain about potential threats to national security, the business model of the new owners, and future governance and operational freedom. The Conservatives have repeatedly failed to protect British businesses from takeovers that might compromise our national security and economic interests. Labour would introduce a robust take-over regime to support and grow our world class industries.”
Crossbench peer Lord Myners, who served as City minister under Gordon Brown, said the government had been caught like a “rabbit in the headlights” by the takeover bids, and that deep-pocketed US buyers were treating the British business world like a hunting ground.
Companies like Ultra specialise in hi-tech systems that offer the British government an advantage in the air, on land and at sea, via the detection of emerging threats. This included systems to detect improvised explosive devices and intercept communications in Afghanistan.
