The £4bn takeover of British defence manufacturer Cobham by the US private equity firm Advent has hit a new delay after the business secretary said she needed more time to consider the deal’s national security implications.
In a parliamentary written statement published on Tuesday, Andrea Leadsom wrote that she needed “further full and proper consideration of the issues”. The new delay may mean that a potentially controversial decision on thetakeover is not made until after the general election on 12 December.
Leadsom’s statement said: “The full legal process will continue to be followed throughout the general election period.”
While ministers will continue in their posts during the election’s purdah period, meaning a decision is possible before 12 December, there is no specific time limit other than a duty to make a decision within a reasonable amount of time.
Advent International and Cobham announced the all-cash deal on 25 July, sending shares in the Dorset-based company surging by more than a third. Cobham’s speciality is air-to-air refuelling technology. It is a supplier to the Ministry of Defence as well as making systems for the space industry.
It employs about 10,000 people worldwide, including about 1,700 in the UK. However, the vast majority of its revenues are earned overseas.
Leadsom first intervened in the acquisition on 17 September on the grounds of national security, which allow takeovers to be investigated and ultimately rejected. The government can also require undertakings from the companies to address any concerns they have.
Leadsom has received written advice on the national security implications from the defence secretary, Ben Wallace. The Competition and Markets Authority delivered a separate report, which will not be published until after Leadsom’s decision, on 29 October.
In her statement, Leadsom said she would carry out “further discussions with her ministerial colleagues and the parties to the transaction to inform the decision-making process”.
A hostile takeover of British aerospace company GKN by Melrose, an investment vehicle, drew heavy criticism after the government declined to intervene.
The Cobham deal drew opposition from some shareholders, but was eventually supported with 93% of the votes. Nadine Cobham, the daughter-in-law of Sir Alan Cobham, the founder, wrote to Leadsom and Wallace asking them to block the deal, arguing it was not in the national interest.