Ultra Electronics has agreed the terms of an all-cash deal from Cobham which the two aerospace and defence companies say will create a stronger combined business and protect UK national security and the country’s industrial base, reports my colleague Alan Tovey.
Backed by Ultra’s management, the £35 per share offer lists a series of “binding commitments to HM Government” aimed at easing concerns about the takeover by Cobham, which is owned by US private equity firm Advent International.
The regulatory filing says that Cobham “recognises the specific importance of Ultra’s contribution to the UK’s economy and national security” and has agreed to provide “legally binding and enforceable commitments”.
The two companies will now “engage proactively and collaboratively with HM Government to agree the detailed terms, duration, nature and form of these commitments”.
Key pledges in the commitments include “safeguarding and supporting the UK’s national security” with protection for sovereign UK capabilities, and continued supply of technology to the UK forces.
Ultra is a vital supplier of sonar systems to the Royal Navy as well as electronics critical to the operation of the UK’s fleet of Trident nuclear missile submarines. The company also supplies Uk allies in the “Five Eyes” group, which includes the US, Canada, Australia and New Zealand.
To further ease worries, British nationals will be on the board to counter national security concerns.
Cobham’s offer for Ultra, which values the business at £2.6bn and represents a 63pc premium to the company’s previous share price, has been attacked by a series of defence commentators.
Senior former military leaders have warned that Ultra’s sensitive technology needs to be protected from foreign ownership.
Business Secretary Kwasi Kwarteng, who has the power to step in if he feels a deal risks the UK’s interests, is understood to be “actively monitoring” the process.
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