Aviation & Aerospace

Published: December 23, 2019 | Updated: December 23, 2019

Government’s green light for controversial takeover of Cobham sparks angry criticism

Cobham’s Wimborne base. The aerospace and defence company employs about 1,000 people in Dorset.
By Andrew Diprose, editor

Controversial plans by a US private equity firm to buy up one of Dorset’s biggest companies have been given the green light by ministers.

The government announced last month it needed more time to consider potential national security issues raised by Advent International’s £4bn takeover deal for Cobham, the Wimborne-based aerospace and defence company.

But at 10pm on Friday, December 20,  Andrea Leadsom, Secretary of State for Business, Energy and Industrial Strategy, 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.

The Business Secretary added sensitive government information would continue 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.

The government announcement came three months after investors in Cobham overwhelmingly approved Advent International’s approach.

Its 165p-a-share offer to delist the business won the support of 93 per cent of shareholders, well over the 75 per cent threshold needed to pass.

The Cobham Board backed the offer.

But the decision to let the 85-year-old company fall into American hands came under strong attack from some small shareholders and also Cobham’s founder family.

Lady Cobham, the widow of former chief executive Sir Michael Cobham, son of founder Sir Alan Cobham, has been a particularly vociferous critic, raising concerns over national security.

Gordon Page, former Chief Executive and, latterly, Chairman of Cobham. He retired from the company in 2008.

Former Cobham Chief Executive and Chairman, Gordon Page, who retired from the company in 2008, has also voiced his opposition saying private equity is not a suitable owner for one of the UK’s biggest defence firms.

Following the government’s approval of the takeover, Lady Cobham described the decision as “deeply disappointing” and criticised the timing.

She said it was “cynically timed to avoid scrutiny on the weekend before Christmas”, adding: “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.”

Among the post-offer undertakings provided to the Takeover Panel, the parties involved have agreed to:

  • maintain Cobham’s headquarters in the UK for each of its Communications & Connectivity, Aviation Services UK and Missions Systems UK businesses.
  • continue the use of Cobham as a registered name in the UK.
  • ringfence the level of research and development spend in the UK.

They’ve also made a further legally binding commitment to the Business Secretary to significantly protect jobs.

The commitment was made through a deed, published alongside the December 20 announcement.

Cobham employs around 10,000 people across five continents with about 1,000 jobs in Dorset.