Defence firm Cobham has announced a deal to buy its rival Ultra Electronics in a £2.75bn deal.
With Ultra’s customers including both the British and US governments, Cobham has also set out commitments to allay any concerns over national security. A statement from Cobham on the deal, which was first proposed in late July, read: “Cobham recognises the specific importance of Ultra’s contribution to the UK’s economy and national security.”
Following any deal being voted through by shareholders, Cobham, which is owned by American private equity firm Advent, said it will “engage proactively and collaboratively with HM Government to agree the detailed terms, duration, nature and form of these commitments, which would apply immediately from completion of the acquisition to protect the Ultra businesses and stakeholders following closing”.
Details are set to include safeguarding and supporting the UK’s national security, continuity of supply and critical capabilities in the UK, and national security clearance arrangements. Cobham has added it would protect existing jobs and invest in research and development to create new ones in UK manufacturing and engineering positions. Ultra would keep its London headquarters and the Government will have an “ongoing dialogue, co-operation and monitoring” position to ensure the commitments are upheld.
Business Secretary Kwasi Kwarteng is reported to have launched a national security investigation under the Enterprise Act which gives the Government the power to intervene in mergers on public interest grounds covering national security.
Ultra board “unanimously” recommending Cobham offer to shareholders
Tony Rice, Chair of Ultra Electronics said: “The Ultra board has… spent considerable time reviewing the potential impact of Cobham’s ownership on Ultra’s stakeholders and is comfortable that their stakeholder commitments plus legally binding undertakings to HM Government will protect stakeholder interests appropriately. The Ultra board therefore unanimously intends to recommend the Cobham offer to shareholders.”
Shareholders in Ultra will get £35 a share as per the terms of the proposed deal, first announced in late July. The board must secure the support of 75 per cent of shareholders when the deal is put to a vote.
Shonnel Malani, chairman of the Cobham Group, said: “We believe Cobham and Ultra’s complementary capabilities delivering mission critical technology will be significantly enhanced through the combination of the two groups, enabling the development of higher performance solutions for our customers.”
He added: “We look forward to working with HM Government, and other relevant stakeholders, to agree legally binding commitments which safeguard Ultra’s contribution to the UK economy and national security.”