London, Sept 18 (AFP/APP):Britain on Wednesday launched a national security probe into a £4.0-billion takeover bid for British defence group Cobham by a US private equity firm.
Advent International in July offered the equivalent of $5.0 billion or 4.5 billion euros for Cobham, aided by the beneficial impact of the Brexit-hit weak pound.
Shareholders at the British company which approved the deal on Monday despite vocal opposition from the founding Cobham family.
Dorset-based Cobham is known for pioneering technology enabling the mid-air refuelling of planes. The firm also makes electronic warfare systems and communications for military vehicles.
“Following careful consideration of the proposed takeover of Cobham, I have issued an intervention notice on the grounds of national security,” Business Secretary Andrea Leadsom said in a statement Wednesday.
She added that the Competition and Markets Authority watchdog would investigate the “national security implications of the transaction” and provide its findings next month.
“The government’s goals are to support private sector innovation whilst safeguarding the public interest,” Leadsom said.
In late morning deals, Cobham shares slid 0.5 percent to 159.65 pence on London’s second-tier FTSE 250 index, which was up 0.2 percent at 20,081.95 points.
“A muted share price reaction… suggests, rightly or wrongly, that the market expects the deal to go through,” said Russ Mould, investment director at broker AJ Bell.
“While there may have been an element of opportunism to Advent’s approach, it is certainly not the first overseas firm to take advantage of sterling weakness to acquire UK assets at a discount,” he said.