After US authorities threatened to scale back their defence collaboration with Britain if the sale was rejected, the company Ultra Electronics, which specialises in crucial electronics for nuclear submarines, was acquired. Advent Foreign, a Boston-based private equity firm operating on the worldwide market and created to aid in the purchase of international enterprises, is expected to acquire the company.
Should the purchase go through, Advent International has promised to divide Ultra Electronics into two distinct legal businesses.
A government-appointed director will be responsible for defending British national security interests and informing authorities if a company tries to resell services critical to the defence industry.
However, Britain will still be able to regain control of the company’s crucial activities if it is considered necessary, such as in the event of a security incident.
“The Secretary of State feels that the proposed assurances would minimise the national security concerns highlighted to an acceptable degree and so proposes to accept the undertakings,” the Business Department said in reference to the buyout.
Before final clearance is granted, interested parties have until July 3 to submit representations regarding the transaction.
Secretly optimistic that the transaction will be successful are insiders acquainted with the agreement.
The sensitive technology for the Royal Navy’s sonar systems is also constructed by a consortium of businesses called Ultra.
After the purchase, the chairman of the company and at least 50% of the board will still be British.
The deal will be in effect for as long as Advent owns Ultra, which it is buying through one of its earlier British purchases, air-to-air refuelling system manufacturer Cobham.
The deal will probably escape further scrutiny from a so-called phase two probe because the Government is clearly prepared to approve the takeover.
Competition watchdogs would probably become more involved in the investigation of the deal.
The diplomatic dispute arose from US officials’ claims that Kwasi Kwarteng, the UK’s business secretary, took too long to approve the agreement, hurting relations between London and Washington in the process.
Senior US Congressional intelligence insider: “We need to eliminate impediments, not create them at a time when allies like the US and the UK are keen to deepen defence cooperation.”
Cobham chairman Shonnel Malani stated on Thursday that the announcement made today is a move in the right direction for investments in Ultra and the Five Eyes alliance.
“We have always been clear about our unshakeable commitment to guaranteeing the protection of the UK’s national security and believe that these extremely significant and strong undertakings will do precisely that,” the statement continued.
Other British-based defence companies have recently been bought by US-based companies.
Along with Cobham and Ultra, the list also includes Meggitt, a manufacturer of Typhoon Eurofighter parts that was acquired by the US company Parker-Hannifin.
