LONDON (Reuters) - Britain has approved the purchase of British defence company Cobham by U.S. investor Advent International for $5 billion after the private equity group made commitments to address national security concerns.
Business minister Andrea Leadsom had put the deal on hold to review the sale of air-to-air refuelling equipment maker Cobham, which employs 10,000 people and also makes communications equipment for military vehicles.
"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," Leadsom said in a statement bit.ly/2PIzbkS published on Friday.
Leadsom had said on Tuesday that Prime Minister Boris Johnson’s new government of was minded to accept the deal after Advent put forward several legal undertakings, including having a number of British executives on Cobham’s boards.
Advent will have to give prior notice to Britain’s defence ministry if it plans to sell all or part of Cobham’s business, and honour existing contracts with the government.
A member of the family which founded Cobham said the decision was deeply disappointing.
“In Cobham, we stand to lose yet another great British defence manufacturer to foreign ownership,” said Nadine Cobham, whose late husband was a son of the company’s founder.
“In one of its first major economic decisions, the government is not taking back control so much as handing it away,” she said, adding that the announcement on the weekend before Christmas had been timed to avoid scrutiny.
Johnson said the sale showed Britain - which is due to leave the European Union at the end of next month - was open to investment from around the world.
“It’s very important that we should have an open and dynamic market economy,” he told British broadcasters during a visit to Estonia. “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.”
Founded in the 1930s, Cobham’s equipment came to the fore ahead of World War Two and in the 1982 Falklands conflict. Its technology is now used in aircraft such as Lockheed Martin’s F-35 Joint Strike Fighter and the Eurofighter Typhoon, as well as advanced naval vessels, satellites and military vehicles.
However, it is still recovering from profit warnings in 2016 and 2017 that forced it to ask shareholders for cash and prompted Chief Executive David Lockwood to overhaul operations.
Advent has already won approval from regulators in the European Union, United States and Finland for its acquisition of Cobham, which was backed by shareholders in September.
The U.S. private equity group also bought British electronics company Laird for $1.65 billion last year.
Reporting by Kanishka Singh in Bengaluru and William Schomberg in London; Editing by Simon Cameron-Moore, Alexander Smith and David Clarke