The government has been accused of handing control away after it approved a US private equity firm’s £4bn takeover of the UK defence company Cobham despite national security concerns.
The deal had been delayed since mid-2019 after fears were raised that Advent International’s acquisition could undermine the country’s security.
Cobham’s founding family criticised the decision, which was announced late on Friday, and said the government had timed it cynically before the Christmas break to avoid scrutiny.
Cobham, which is based in Dorset and employs 10,000 staff, is considered a pioneering world leader in air-to-air refuelling technology. It has extensive contracts with the British military and also manufactures electronic warfare and communications systems for military vehicles.
Advent’s offer to purchase Cobham was approved by shareholders in August, but delayed in September when the government intervened on national security grounds.
On Friday, however, the business secretary, Andrea Leadsom – who led the consultation over the deal – gave the go ahead. It came after Advent proposed a series of legal undertakings designed to mitigate potential national security concerns, including protecting sensitive government information and giving notice to the government over future sale plans.
Lady Nadine Cobham, the daughter-in-law of the company’s founder Sir Alan Cobham, said: “This is a deeply disappointing announcement and one cynically timed to avoid scrutiny on the weekend before Christmas.
“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.”
Boris Johnson defended the sale. He said: “I think it’s very important that we should have an open and dynamic market economy.
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.”
The business, founded in 1934 as Flight Refuelling Ltd, was floated in 1985 but the family maintained a large stake. The firm’s air-to-air refuelling technology played a key role in the 1982 Falklands war.
Leadsom said: “This decision has been meticulously thought over, and I have taken advice from the defence secretary, the deputy national security adviser and government officials across multiple departments. I have also met with both of the companies on several occasions, as have several senior members of my department.
“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.
“While trade and investment play an important part in the UK economy, when intervening in mergers on national security grounds, I will not hesitate to use my powers to protect national security, if it is appropriate to do so.
“Separately, the companies have given a legally binding commitment that there will be significant protection of jobs and have also agreed with the takeover panel that Cobham’s headquarters will remain in the UK, that the Cobham name will continue to be used and that there will be a guaranteed level of R&D spend. This will secure the future of Cobham and the important role it plays in our world-leading defence sector and economy.”
Ed Davey, the acting Lib Dem leader, joined in criticism of the merger. “It is deeply concerning that the Conservative government is allowing this sale to go ahead, despite previously cited concerns that it could undermine our national security. While Andrea Leadsom claims these concerns have been mitigated we have yet to see evidence of this,” he said.
“If Boris Johnson’s government are happy to sell off a leading UK defence and aerospace company to Trump’s America, how can we expect his government to protect our defence and manufacturing sectors, not to mention every other sector of our economy, as they negotiate trade deals after Brexit?”
David Lockwood, the chief executive of Cobham, 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.”