19 August 2021

Competition watchdog confirms national security investigation into Ultra takeover

19 August 2021

The competition watchdog has confirmed it will investigate the potential takeover of UK defence business Ultra Electronics by US-owned rival Cobham

Business Secretary Kwasi Kwarteng ordered an inquiry into the proposed acquisition of the company to assess any national security concerns.

On Thursday morning, the Competition and Markets Authority (CMA) said it will now look whether competition would be lessened and issued a formal request for submissions to assess whether the deal would impact national security.

A report will be sent to the Business, Energy and Industrial Strategy (BEIS) department by a Government-imposed deadline of January 18 2022.

The CMA said the report will include “a summary of any representations the CMA receives which relate to the public interest consideration, namely national security, and which are or may be relevant to the Secretary of State’s decision.”

Cobham Group, which is owned by US private equity house Advent, confirmed on Monday that it has agreed a £2.57 billion deal for London-listed Ultra Electronics.

But by Wednesday Mr Kwarteng said he had instructed the CMA to investigate the proposed acquisition of Ultra Electronics by Cobham to assess any national security concerns.

“The UK is open for business; however, foreign investment must not threaten our national security,” Mr Kwarteng wrote on Twitter.

He has also tabled an order in Parliament preventing Ultra Electronics from disclosing sensitive information to Cobham about the goods or services it provides to the Government or Britain’s armed forces.

It should not have been left until the 11th hour for Government to step in and scrutinise this deal

Bosses at Cobham had said they would agree to binding commitments to the Government, including safeguarding and supporting the UK’s national security, continuity of supply and critical capabilities in the UK, and national security clearance arrangements.

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

Shadow business minister Chi Onwurah said: “It should not have been left until the 11th hour for Government to step in and scrutinise this deal.

“The Government has given itself new powers to intervene but has no clear strategy on how and when to use them.

“Labour would introduce robust takeover safeguards to support and grow our world-class industries and protect our vital national interests.”

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