23rd Dec 2019 09:45
(Alliance News) - Cobham PLC said Monday it and Advent International Ltd have agreed on post-offer undertakings with the UK Panel on Takeovers & Mergers for approval of the US private equity firm's GBP4 billion takeover of the FTSE 250 aerospace and defence firm.
In addition, Cobham noted that the UK Secretary of State of Business, Energy & Industrial Strategy will not make a phase two reference to the Competition & Markets Authority in relation to the acquisition.
A merger between Cobham and Advent was agreed in July but was delayed due to national security concerns.
The deal was criticised because of the Advent's lack of experience in the sector and the short-term mindset of investment companies.
The UK government signed off the takeover on Friday after Advent proposed a number of legally binding obligations to protect the UK's interests.
The post-offer undertakings includes Cobham's Communications & Connectivity, Aviation Services UK and Mission Systems UK businesses each maintaining a headquarters in the UK.
In addition, Cobham's research & development spending for the expenditure period from January 1, 2020 to December 31, 2024 must be at least 4.4% of the aggregate amount of the sales derived from Communications & Connectivity and Mission Systems UK.
Of this spending, at least 90% of it can be made in the first two years of the expenditure period to the end of 2022.
As well as economic undertakings, Cobham and Advent agreed to national security undertakings, including Cobham's compliance with its contractual obligations to the UK Ministry of Defence and the Home Office.
These include the ongoing protection of sensitive government information and requiring prior notice to the MoD and Home Office on any future plans to sell the Cobham business.
Following this agreement, Cobham said it has gained regulatory approval from the EU, US, France, Australia and Finland.
Cobham's takeover is now subject to being sanctioned by the court, for which a hearing will be held on January 15. Should the sanction be given, the scheme will become effective on January 17.
Assuming those dates, Cobham's shares then would be delisted from the London Stock Exchange on January 20.
"Advent takes its custodianship of Cobham seriously, and we are confident the transaction and undertakings being given on national security, jobs and future investment, provide important long-term assurances for both Cobham's employees and customers, particularly in the UK and also globally," said Shonnel Malani, partner at Advent.
Shares in Cobham - which is based in Wimborne Minster - were up 0.4% at 164.33 pence on Monday in London.
Nadine Cobham – daughter-in-law of the firm's founder Alan Cobham – said the decision by the UK government was "deeply disappointing" and accused the government of "handing control away".
Alan Cobham founded the business in 1934 as Flight Refuelling Ltd, specialising in air-to-air refuelling technology. It was floated in 1985, although the family maintained a large stake.
By Dayo Laniyan; [email protected]
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