The proposal of acquiring the United Kingdom based defence and aerospace company Cobham by a private equity firm of the United States has been approved by the UK government.
The £4bn offer to buy Cobham announced by Advent International in July had been held up as the UK government wanted to review the deal because of national security concerns.
The announcement for approval of the deal was made by the UK government late on Friday night. The founding family of the UK firm described the decision as being “timed to avoid scrutiny”.
The UK remained a “dynamic” part of the defence industry, said UK prime minister Boris Johnson.
The British military has given extensive contracts to Cobham, which has about 10,000 employees and is viewed to be a global leader in the field of air-to-air refuelling technology. Electronic warfare systems and communications for military vehicles are also made by the company which is based in Wimborne, Dorset.
The expertise and technology of the company has helped the UK in the Falklands War as it was used for be the Royal Air Force to launch attacks on the remote Port Stanley airfield.
The role played by the air-to-air refueling technology of the company has played by a very critical role in modern warfare, said defence experts, and hence there can be national security issues by the acquisition of the company.
Advent’s offer was approved by the shareholders of Cobham in August. However there was a government intervention about the acquisition a month later because of concerns over national security from the deal.
The government has been satisfied that the risks that had been identified had been adressedd “to an acceptable level” which has allowed the acquisition to continue, said UK Business Secretary Andrea Leadsom in a statement on Friday.
Before the department came to the decision, it had taken advice from the defence secretary and the deputy national security adviser, Leadsom said and added that the decision had been “meticulously thought over”.
The decision of the government was “deeply disappointing” and the timing of the decision was criticized by Lady Nadine Cobham – part of the family which set up the UK firm.
It was “cynically timed to avoid scrutiny on the weekend before Christmas”, she said and added: “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.”
The timing of the government decision, just before 10pm on a Friday, was described as odd by such a crucial decision.
It was as if the government rather wanted no-one to notice what had happened, one defence analyst was quoted in the media as saying.
Since there were little doubt that the deal would be blocked by the government and because there was overwhelming support for the deal by shareholders in Cobham, therefore if the announcement of the government decision had been at a more normal hour, there would not have been as much attention to the deal as is being accorded because of the odd timing of the decision,
(Adapted from BBC.com)