The £4bn takeover of the FTSE 250 defence manufacturer Cobham is being resisted by a family shareholder, according to a report in The Times, amid fears about the 'hollowing out' of the UK's defence manufacturing base.
According to The Times, Lady Nadine Cobham, whose father in law Sir Alan Cobham founded the company, has written to defence secretary Ben Wallace and to the business secretary Andrea Leadsom asking them to intervene, despite Cobham’s board backing the acquisition by the global private equity firm Advent International.
The newspaper said her concerns were over the ‘hollowing out’ of the UK defence industry and that assurances given by Advent about the future of jobs and skills in the company should be treated ‘with scepticism’.
Advent has said it has no plans to cut jobs, research or factories.
Cobham, based in Dorset, was founded in 1934 to provide air-to-air refuelling. It has a global workforce of 10,000 – around 1,700 of which are based in the UK.
Its technology is used to refuel most of the West’s fighter jets. It also makes satellite communications and electronic warfare equipment.
Lady Cobham’s husband Sir Michael ran Cobham from 1969 to 1992 after succeeding his father.
Her warning follows last year’s controversy over the takeover of GKN by another PE company Melrose.
GKN’s aerospace factory at Kings Norton was closed following the £8bn takeover in 2018.
Melrose denied this was in breach of its assurance, but was accused of bad faith by unions and politicians.
Cobham has had a difficult time in recent years, calling on shareholders for up to £1bn in cash to keep going. In her letter, Lady Cobham said that Advent would benefit from the years of investment the company had ploughed into its refuelling technology.
David Lockwood, chief executive of Cobham, told The Times he had mixed feelings about the deal, but said it was in the best interests of shareholders.
“I believe the UK should have a strong, locally owned defence industry,” he said, “but the MoD is less than 5% of [Cobham’s] business. The majority is outside the UK.
“From a personal point of view, I feel disappointed, maybe sad. But [chairman] Jamie Pike led the board through a very thorough process and there was only one logical outcome, and that’s what we are paid to do. We’ve done the right thing for shareholders.”
You might also be interested in reading:
- GKN loses the fight. Melrose wins: what next?
- Foreign-owned manufacturers are twice as productive as British-owned
- Sanjeev Gupta and the rebirth of the UK steel industry