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UK approves £4bn takeover of defence company Cobham UK approves £4bn US takeover of defence company Cobham
(about 8 hours later)
The government has approved a US private equity firm's takeover of UK defence and aerospace company Cobham.The government has approved a US private equity firm's takeover of UK defence and aerospace company Cobham.
Advent International made a £4bn offer to buy Cobham in July and shareholders approved the deal last month. Advent International made a £4bn offer to buy Cobham in July and shareholders approved the deal in August.
But Cobham's founding family raised concerns about the security implications of the deal, prompting a government consultation. A government report found the merger caused some national security risks, but said on Friday concerns had been mitigated to an "acceptable level".
Business secretary Andrea Leadsom has now said she is satisfied any risks have been mitigated. The founding family of the firm said the announcement on Friday evening was "cynically timed to avoid scrutiny".
Cobham, which employs 10,000 people, is known for pioneering technology enabling the mid-air refuelling of planes. The firm, based in Wimborne, Dorset, also makes electronic warfare systems and communications for military vehicles. Cobham, which employs 10,000 people, has extensive contracts with the British military and is seen as a world leader in air-to-air refuelling technology.
Defence experts said its role in air-to-air refuelling is essential for modern warfare and could raise national security issues if the company was sold. The firm, based in Wimborne, Dorset, also makes electronic warfare systems and communications for military vehicles.
But Mrs Leadsom said the decision had been "meticulously thought over" and came after she took advice from the defence secretary and the deputy national security adviser.
She said: "Having considered the consultation responses and further advice from the defence secretary, I am satisfied that the undertakings mitigate the national security risks identified to an acceptable level and have therefore accepted them and cleared the merger to proceed."
The business secretary said sensitive government information would continued to be protected under the new owner and existing contracts would be honoured.
The company is also obliged to give the government prior notice of any plans to sell the whole, or elements of, Cobham's business.
Cobham has extensive contracts with the British military and is seen as a world leader in air-to-air refuelling technology.
Its expertise played a significant role in the Falklands War, allowing the Royal Air Force to attack the remote Port Stanley airfield.Its expertise played a significant role in the Falklands War, allowing the Royal Air Force to attack the remote Port Stanley airfield.
Lady Nadine Cobham, 76, the widow of Sir Michael Cobham, who built the company up over 25 years, had suggested the deal might jeopardise the UK's capacity for mid-air refuelling in the future if parts of the company were sold off by Advent. Defence experts said its role in air-to-air refuelling was essential for modern warfare and could raise national security issues if the company was sold.
Speaking earlier this year to the Mail on Sunday, she said she would not accept Advent's assurances about its plans. "I don't think it would be worth the paper it's written on," she said. In September the government intervened in the takeover, citing national security concerns.
But in a statement on Friday, Business Secretary Andrea Leadsom said she was satisfied the risks that had been identified had been mitigated "to an acceptable level" - and allowed the deal to go ahead.
Mrs Leadsom said the decision had been "meticulously thought over" and came after she took advice from the defence secretary and the deputy national security adviser.
Just before 10pm on a Friday is an odd time for this kind of thing to be announced.
One defence analyst remarked that it was as if the government rather wanted no-one to notice what had happened.
The curious timing may actually draw more attention than if it had been done at a more normal hour - few doubted the government would block the deal, and shareholders in Cobham have already voted overwhelmingly in favour.
It says something of the sensitive nature of Cobham's business that much of the published version of the competition regulator's report on the takeover was simply blacked out.
In one unedited passage of the report, the Ministry of Defence said if the deal went ahead there was "a risk that the institutional framework and safeguards required by the government's security framework may be undermined".
The business secretary added sensitive government information would continued to be protected under the new owner and existing contracts would be honoured.
The company is also obliged to give the government prior notice of any plans to sell the whole, or elements of, Cobham's business.
'Deeply disappointing'
However, Lady Nadine Cobham - part of the family which set up the UK firm - called the decision "deeply disappointing" and criticised the timing of the decision, announced late on Friday night.
Lady Cobham said it was "cynically timed to avoid scrutiny on the weekend before Christmas".
She has previously warned the deal could jeopardise the UK's capacity for mid-air refuelling
She said: "In one of its first major economic decisions, the government is not taking back control so much as handing it away.
"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."
Sir Alan Cobham founded Flight Refuelling Limited in 1934, which has grown to become a group of companies under the Cobham family name.
Lady Cobham is the widow of Sir Alan's son, Sir Michael Cobham.