Advent International made their offer to buy British defence firm Cobham earlier in the year amid heavy criticism.
In July 2019, the company’s board agreed to recommend a takeover offer of £4 billion from American private equity firm Advent International. However, the bid was criticised by Cobham’s largest shareholder, and the firm’s chairman subsequently remarked that Cobham was seeking out alternative offers.
Lady Nadine Cobham, whose family founded the firm, said:
“This is a deeply disappointing announcement and one cynically timed to avoid scrutiny on the weekend before Christmas. In one of its first major economic decisions, the government is not taking back control so much as handing it away.”
In response, Advent issued several guarantees, intending to mollify national security concerns ahead of pending approval of the deal by the British Government.
Boris Johnson, on a visit to see British troops in Estonia, told press:
“I think it’s very important that we should have an open and dynamic market economy. 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 and the UK will continue to be a very, very creative and dynamic contributor to that section of industry and all others.”
However, a Competition and Markets Authority report published at the end of October said the MoD had outlined two main areas of security concern over the sale.
“The MoD submitted that it considers that there are two main areas of national security concern arising from the proposed Transaction, namely those arising from:
(a) the potential for any parties to the Transaction to have access to information, either held on, or passing through, Cobham’s systems, which would allow unauthorised persons to understand either the detail of MoD capabilities and activity, or would allow a more strategic picture of capabilities and activity to be built up; and
(b) the extent to which the Transaction posed a risk to existing MoD programmes if the merged entity took decisions to exit from, underinvest in, or move off-shore, the associate capability. “
Shonnel Malani, partner at Advent, said:
“We are confident the transaction and undertakings being given on national security, jobs and future investment, provide important long-term assurances for both Cobham’s employees and customers, particularly in the UK and also globally.”
Who are Cobham anyway?
Cobham was originally founded by Sir Alan Cobham as Flight Refuelling Limited (FRL) in 1934. A wide range of aircraft have since been equipped with Cobham’s refuelling equipment. The company has grown and diversified into various markets, often through acquisitions. Michael Cobham, Alan’s son, took over its leadership during 1969.
During 1994, the firm was formally renamed Cobham plc; by this point, the company had in excess of 10,000 employees and had operations present in North America, Europe, Malaysia and South Africa.
Cobham is organised into divisions:
- The Cobham Mission Systems division is the world market leader in aerial refuelling.
- The Cobham Advanced Electronic Solutions division specialises in radar, communication and electronic warfare systems, and is the world leader in advanced tactical military vehicle intercom systems.
- The Cobham Communications and Connectivity division is a world leading supplier of satellite, radio, and wireless mobile connectivity products.
- The Cobham Aviation Services division provides a range of aviation services including Search & Rescue and Flight training to military and civilian customers. At the UK’s Defence Helicopter Flying School, it trains all UK helicopter pilots for British Armed Forces.