Commercial secretary launches deal with Ultra Electronics – .

0
37
Commercial secretary launches deal with Ultra Electronics – .


Ministers gave the strongest signal to date that the takeover of British defense giant Ultra Electronics by US private equity could be blocked.

Government sources said Business Secretary Kwasi Kwarteng was taking an “active interest” in the approach of £ 2.6 billion for the FTSE 250 listed company by Cobham owner Advent International.

It is supposed to prepare for a national security review if the companies enter into a formal agreement.

Get involved: Government sources say Business Secretary Kwasi Kwarteng is ‘actively’ interested in approaching £ 2.6bn

Advent filed a 3,500 pence per share offer for Ultra, which manufactures parts for Typhoon fighter jets and spearfishing sonobuoys, last week.

He arrived nearly a month after announcing he was considering an offer.

But the move has already drawn criticism from politicians and former military chiefs worried that more pioneering British aerospace companies are falling into the hands of foreign private equity predators.

Kwarteng has the power to intervene in takeovers that could threaten the security of Britain – and even stop them.

He ordered officials from the Department of Business, Energy and Industrial Strategy to monitor the proposed deal.

It would either be reviewed under current laws or a new national security and investment regime, which comes into effect in January and gives ministers more power to engage in takeovers. A source close to Kwarteng said, “Given the sensitivities, the business secretary is definitely interested. Although no decision has been made, we will continue to monitor the transaction closely.

No safety investigation can be launched until the companies have come to a formal agreement.

Ultra employs around 1,700 people in the UK and 4,500 worldwide. Founded in 1920, it had a turnover of £ 860million last year.

Ultra’s board of directors is “willing to accept” Advent’s proposal, and the private equity group has until August 20 to make a formal offer. Ultra stock fell 5% to 3110p yesterday after the security review plans were announced.

Advent is expected to win over skeptics after its £ 4bn buyout of Cobham last year. The buyout titan has since split Cobham into several pieces and sold them – reneging on his promises to be a long-term investor.

Next, Business Secretary Andrea Leadsom launched a safety investigation and nodded to the deal after concluding that Advent’s commitments were sufficient. Advent says he has offered assurances that appropriate national security commitments will be offered to the government.

But the former head of the Royal Navy, Admiral Lord West, said he was “shocked” by Advent’s decision. And former Defense Secretary Lord Heseltine said the potential deal is “another example of the mindset that everything is for sale in this country.” Phantom Armed Forces Minister Stephen Morgan said: “The government must protect our sovereign capability and prevent the depletion of pioneer UK manufacturers and supply chains essential to support our naval platforms. ”

Ultra declined to comment.

Staff must be protected, says ex-boss

The former boss of Ultra Electronics said private equity bidder Advent International must protect jobs if he buys the high-tech defense company.

Douglas Caster, who spearheaded a management buyout that formed Ultra in 1993 and served as managing director from 2005 to 2010, praised its “excellent technology” and said workers should be “looked after”.

Its products include floating sonar capable of detecting enemy submarines. But Advent’s 3500p offer is controversial – the latest blow to the UK aerospace and defense industry – and less than two years after it came to Cobham.

Caster said: “It is very difficult to say that shareholders should not sell their shares at this price. The bonus is simply unassailable.

“But Advent must do its best to preserve the jobs of the people who have made the company great. ”

Caster became president of Ultra in 2010 before stepping down in 2018. He is president of Morgan Advance Materials, an electronics engineering company.

Some links in this article may be affiliate links. If you click on it, we can earn a small commission. This helps us fund This Is Money and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

LEAVE A REPLY

Please enter your comment!
Please enter your name here