Ultra takeover comes under national security scrutiny
Cobham SPS-1000 multi-axis gimbal system with UAV in background. (Photo: Cobham)
The UK government has launched a consultation into the proposed acquisition of Ultra Electronics by Cobham Ultra Acquisitions Limited, which is owned by US private equity firm Advent International.
The consultation, launched on 23 June on national security grounds, will last until 3 July but it is unlikely to change the outcome of the deal.
According to a statement from the Department for Business, Energy & Industrial Strategy and the Competition Markets Authority, the government ‘is minded to accept’ guarantees to address national security concerns following advice from the MoD.
Among the proposed undertakings from Advent, Ultra will be split into two UK legal entities over which the government will have ‘strong step-in rights’ to enable the transfer of ownership, either to itself or a third party, on national security grounds.
These step-in rights will resemble a ‘golden share’.
Additionally, Advent will be required to institute a government-approved plan to prevent International Traffic in Arms Regulations (ITAR) controls applying to ITAR-free products designed and manufactured by Ultra.
Cobham offered $3.57 billion to take over Ultra in July 2021, triggering concerns about the potential erosion of UK defence industrial sovereignty.
At the same time, the government is trying to balance its commitment to free-market economics with its pledge in its Defence Security and Industrial Strategy to prioritise the long-term development of a sovereign industrial base.
More from Defence Notes
-
How the Pentagon will use private capital to fund critical capabilities
The DoD has changed its structures and is been increasing efforts to facilitate access to loans by companies interested in working with artificial intelligence, advanced materials and semiconductors, biotechnology and quantum science.
-
HAL is major beneficiary of latest Indian procurement approvals
India has approved millions of dollars in new military purchases, most of which will go to public sector companies.
-
Why cybersecurity must be a priority for Latin American militaries
The main obstacles to overcoming risks in the region are a lack of a strong cybersecurity culture and inadequate funds to invest in this domain given a widespread Chinese presence in the region.
-
MBDA navigates supply chain pressures amidst increased demand for armaments
MBDA is adapting to supply chain pressures as the Russian invasion of Ukraine leads to increased demand for armaments.
-
Why UK defence still faces an uncertain future and difficult decisions
Despite the additional funding promised this week, the UK armed forces still look set to face cutbacks, and maintaining international commitments to AUKUS and GCAP may limit the options for other programmes.
-
What's the deal with defence procurement? (podcast)
This week on the Shephard Defence Podcast, senior naval reporter Harry Lye and military training & simulation reporter Norbert Neumann chat with Professor John Louth.