The UK government have appeared to have give the green light for the planned purchase of Cobham (LON: COB) by US private equity group Advent.
The deal is set to cost Advent $5 billion, and the deal won clearance after the group offered a number of commitments to address national security concerns.
Shares in Cobham rallied 3.68% after the announcement and are trading at 160p. 19/11/19 11:55BST.
The deal was put on hold after British business minister Andrea Leadsom spoke to government departments about the risk of the deal.
However, Leadsom confirmed on Tuesday that she would allow the deal to take place following an agreement of several legal details including the placement of British Executive’s on the Cobham board.
“We have worked closely with the Ministry of Defence to construct undertakings that would adequately mitigate against any potential national security risks,” Shonnel Malani, partner at Advent, said.
Advent will also have to give prior notice to the Ministry of Defense, if arrangements are made to sell Cobham’s business are made whilst government contracts are still to be fulfilled.
“No decision will be taken on whether to accept the undertakings until the consultation has closed and the representations have been carefully considered,” Leadsom said in a statement.
However, the Cobham is still recovering from a string of profit warnings in 2016 and 2017 that forced it to ask shareholders for cash and prompted Chief Executive David Lockwood to overhaul operations.
“This is a significant milestone and an important step towards providing greater certainty for Cobham’s employees and customers,” Lockwood said in response to Leadsom’s comments.
Competitors have made gains in the industry, where QinetiQ Group plc (LON: QQ) reported strong gains in their most recent update. Additionally, Ultra Electronics (LON: ULE) met market expectations in their most recent update.
However big names such as Lockheed Martin (NYSE: LMT) and Boeing (NYSE: BA) continue to make headlines in dominating the industry.
