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Ministers have stopped asking if business deals are good for Britain

Inside Business: More deals like the £4bn takeover of defence firm Cobham by a US bidder are on the horizon

James Moore
Chief Business Commentator
Thursday 25 July 2019 16:25 BST
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One major drag on Cobham has been its work on Boeing’s KC-46 tanker programme
One major drag on Cobham has been its work on Boeing’s KC-46 tanker programme (Reuters)

There are so many bad things happening in Britain right now that the overseas takeover of yet another big British business, one that actually makes things and sells them overseas, seems barely to have been noticed.

Another reason is perhaps that Cobham, an aerospace and defence business that has agreed to a £4bn bid from American buyout firm Advent International, is hardly a household name.

It is perhaps best known as a pioneer of air to air refuelling tech, but it also supplies electronic and radar equipment to the civilian aerospace as well as the defence industry. Its kit can be found in just about every Airbus jet, for example.

Advent’s offer represents a 34 per cent premium over Wednesday’s closing share price, and it looks like a shoo-in to get the 75 per cent support from shareholders that it requires for the deal to go through.

The premium looks like a tasty one, and the majority of its investors will likely sign up in a heartbeat.

For a start, the board has backed it unanimously, as has Artemis, one of its bigger institutional shareholders. While the company has found its feet of late, its recent history has not been entirely happy. It issued a string of profit warnings between 2015 and 2017. In the last of those years it tapped shareholders for an emergency £500m to help with a debt-mountain built up in part through a botched acquisition.

The new shares, issued through the cash call, were priced at 75p. Investors who signed up and held on to them are getting 165p in cash from Advent. Cha-ching.

Could Cobham have got there on its own, though? The shares were at a higher level than that as recently as the beginning of 2016. It might seem like a tall order given Britain’s desperate political climate, but the question is rarely asked even when things are going well. The rule in the City is you take the money and run when it’s offered.

Another rarely raised question, unless the company involved is a big household name, is whether the deal is a good one for this country.

In the case of Cobham, the government may not even need to lie about this being an investment in Britain that shows off its vim.

Advent has surely been assisted by the climate that government has created. Its behaviour has so tarnished Sterling that shares denominated in the UK’s currency are unnaturally cheap for overseas bidders, which can therefore afford to make their offers look generous.

With the requirement to act like a good little vassal of the US, any muted objections to the deal will fall on deaf ears. There’ll be no question of using the slightly beefed up powers the government has to halt takeovers involving sensitive companies like this one.

There will probably be more like this in the months ahead. That you can count on. As they’re announced it would be entirely appropriate to trot out an old Queen number. I’m thinking, of course, about “Another One Bites the Dust”.

They too ought to be the subject of debate but it’s highly unlikely that they’ll elicit much more than a shrug of the shoulders.

The hard-right nationalists in Boris Johnson’s cabinet are trying to sell the line that they believe in Britain. In reality, they’re sitting back as it is sold off on the cheap, and us with it.

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