Business Secretary wades into Ultra Electronics deal

As fears mount over £2.6bn private equity bid for Ultra Electronics… Business Secretary Kwasi Kwarteng wades into defence deal

Ministers have given the strongest signal yet that the takeover of British defence giant Ultra Electronics by US private equity could be blocked. 

Government sources said Business Secretary Kwasi Kwarteng is taking an ‘active interest’ in the £2.6billion approach for the FTSE 250- listed company by Cobham owner Advent International. 

He is understood to be preparing a national security review if the companies strike a formal deal. 

Getting involved: Government sources said Business Secretary Kwasi Kwarteng is taking an ‘active interest’ in the £2.6billion approach

Advent tabled a 3500p per share bid for Ultra, which makes parts for Typhoon fighter jets and submarine-hunting sonobuoys, last week. 

It came almost a month after it said it was mulling an offer. 

But the move has already attracted criticism from politicians and former military chiefs worried about more pioneering British aerospace companies falling into foreign private equity predators’ hands.

Kwarteng has the power to intervene in takeovers that could put Britain’s security under threat – and even stop them. 

He has ordered civil servants at the Department for Business, Energy and Industrial Strategy to monitor the proposed deal.

It would either be scrutinised under current laws or a new National Security and Investment regime, which comes into force in January and gives ministers greater powers to wade into takeovers. A source close to Kwarteng said: ‘Given the sensitivities, the Business Secretary is definitely taking an active interest. While no decisions have been taken, we’ll continue to monitor the transaction closely.’ 

No security probe can be launched until the companies reach a formal agreement. 

Ultra employs around 1,700 people in the UK and 4,500 worldwide. Founded in 1920, it made revenues of £860m last year.

Ultra’s board is ‘minded to accept’ Advent’s proposal, and the private equity group has until August 20 to table an official bid. Ultra’s stock fell 5 per cent to 3110p yesterday after news of the security review plans emerged. 

Advent would need to win over sceptics after its takeover of Cobham for £4billion last year. The buyout titan has since broken Cobham up into several pieces and sold them – reneging on promises to be a long-term investor. 

Then business secretary Andrea Leadsom launched a security probe and waved the deal through after concluding that Advent’s undertakings were enough. Advent says it has offered assurances that appropriate national security undertakings will be offered to the Government. 

But former head of the Royal Navy, Admiral Lord West, has said he is ‘shocked’ by Advent’s move. And ex-Defence Secretary Lord Heseltine has said the potential deal is ‘another example of the mindset that anything is up for sale in this country’. Shadow armed forces minister Stephen Morgan said: ‘Government must protect our sovereign capability and prevent the hollowing out of pioneering British manufacturers and supply chains critical to supporting our naval platforms.’ 

Ultra declined to comment.

Staff must be protected, says ex-boss 

THE former boss of Ultra Electronics has said private equity bidder Advent International must protect jobs if it buys the high-tech defence firm. 

Douglas Caster, who led a management buyout that formed Ultra in 1993 and was chief executive from 2005 to 2010, hailed its ‘great technology’ and said workers should be ‘looked after’. 

Its products include floating sonar devices that can detect enemy submarines. But Advent’s 3500p offer is controversial – the latest swoop on Britain’s aerospace and defence industry – and less than two years after it pounced on Cobham. 

Caster said: ‘It’s very difficult to say shareholders should not sell their shares at that price. The premium is just unassailable. 

‘But Advent must do its best to preserve the jobs of the people who have made the company great.’ 

Caster became Ultra’s chairman in 2010 before stepping down in 2018. He is chairman of Morgan Advance Materials, an electronic engineering firm.