Ultra Electronics Holdings PLC (LSE:ULE) is set to fall into US hands after UK business secretary Kwasi Kwarteng raised no objections to the agreed bid from Advent International.
The takeover of defence firm Ultra by Cobham PLC (LSE:COB), owned by US private equity giant Advent, was agreed in August of last year but was put on hold while the government ran the rule over the deal to see whether it would affect national security.
READ: London’s defence sector to become a little less British as Meggitt, Ultra Electronics agree to international takeovers
Kwarteng has indicated he is minded to accept the legally binding undertakings proposed by Cobham to address the public interest concerns in relation to UK national security, instead of making a reference to a phase 2 inquiry.
The undertakings include the creation of two new ‘SecureCos’, UK legal entities encompassing the UK Ultra facilities that deliver the sensitive capabilities to the UK government; board representation for the government on the SecureCos in a non-executive capacity; granting of the right of the government to approve the Articles of Association of each SecureCo and draft their strategic objectives; step-in rights that give the government rights similar to a “special share”, enabling transfer of ownership of the SecureCos on national security grounds, either to a third party or the government.
The government would also be granted access to Ultra’s intellectual property and be given the right to transfer knowledge or training necessary for the government to exercise its step-in rights effectively.
The proposed undertakings are now the subject of a public consultation until midnight at the end of 3 July 2022, in accordance with the process set out in the Enterprise Act 2002.
Shares in Ultra rose 135 to 3,458p on the news. Cobham is offering 3,500p a share to get its hands on the supplier of nuclear submarine equipment.