UK defence firm bid monitored by government

The government says it is "closely monitoring" the proposed takeover of a UK defence firm by a US private equity-owned company.

Ultra Electronics, a major supplier to the Royal Navy, has edged towards accepting a £2.6bn bid from Cobham.

Ultra said the offer was at a level that its board would be "minded to recommend" to shareholders.

However, the company said the deal would be subject to the "satisfactory resolution" of other terms.

The bid comes after Cobham, a defence and aerospace business, was controversially bought by private-equity firm Advent in 2019.

In a stock market statement, Ultra said the £35.16-a-share offer would be subject to "consideration and satisfactory resolution of other terms and arrangements, including the establishment of safeguards for the interests of Ultra's stakeholder groups".

"In relation to this, Cobham has indicated to the board that it is minded to offer the UK government appropriate undertakings in respect of national security," the firm added.

A spokesman for Cobham said the company had "offered assurances" to Ultra over national security.

"We look forward to continuing our discussions with the board of Ultra, with the view to creating a global defence electronics champion," a statement said.

The government said it was aware of the proposed purchase and while it was a "commercial matter", officials were "closely monitoring the transaction".

Sky News reported Kwasi Kwarteng, the business secretary, had ordered officials to launch a national security investigation under the Enterprise Act.

The act gives the government the power to intervene in mergers on public interest grounds covering national security.

Dorset-based Cobham, which employs 10,000 people, is known for pioneering technology enabling the mid-air refuelling of planes.

The firm also makes electronic warfare systems and communications for military vehicles. Its expertise is said to have played a significant role in the Falklands War, allowing the Royal Air Force to attack the remote Port Stanley airfield.

Concerns over national security were raised when private-equity firm Advent International bought Cobham for £4bn in 2019. However, the UK government approved the deal.