Shares in Ultra Electronics (LON:ULE) opened 1.7% lower after the British government ordered a probe of its £2.6bn takeover by private equity-backed rival Cobham.
On Wednesday, business secretary Kwasi Kwarteng issued an intervention notice on the grounds of national security.
Ultra was told it would be prevented from passing on details of the “goods or services it provides to HM Government or HM Armed Forces”, while the Competition and Markets Authority (CMA) examined the deal.
Kwarteng made the move after reviewing advice from defence officials about the impact of the deal, which is being backed by US buyout giant Advent.
Ultra is a key UK armed forces contractor making vital equipment for the Typhoon fighter jet and the Royal Navy’s submarines.
At 8.30 am, the company’s shares were trading at £33.08, down 56p, valuing the business at £2.36bn.