(Reuters) - British defense contractor Ultra Electronics said it expected a delayed decision from the U.S. Department of Justice (DoJ) on its $234 million purchase of Sparton Corp.
Ultra Electronics, whose shares fell 7.9 percent to 1577 pence at 0840 GMT and were the worst performers on the FTSE Midcap Index, said on Friday that it had agreed with the DoJ on time targets for further document submission and time limits for the DoJ’s discovery and decision-making.
Assuming that Ultra Electronics and the DoJ meet a Nov. 30 target, a decision from the DoJ is now expected at the end of March next year, the British firm said.
Ultra Electronics said in July that it would buy Sparton Corp, which makes anti-submarine warfare devices used by the U.S. Navy, creating a major supplier in underwater warfare, including to the U.S. Department of Defense.
However, the British firm said in September that the DoJ had asked for additional information under the Hart-Scott-Rodino Antitrust Improvements Act.
Liberum analysts, who rate Ultra Electronics shares as a “buy”, said further delays were possible, while analysts at Berenberg downgraded the stock to a “sell” from “hold”, citing “persistent organic decline”.
Berenberg analysts also pointed to budgetary pressure in the British defense market, which accounts for about 15 percent of the group’s revenue and forecast Ultra Electronics would miss its full-year targets.
U.S. President Donald Trump has sought what he called a “historic” increase in defense spending and has criticized European nations for low defense spending.
Reporting by Noor Zainab Hussain in Bengaluru; editing by Alexander Smith