A consultation on steps to address the national security concerns
raised by the proposed acquisition of Ultra Electronics Holdings
plc, a UK defence company, by Cobham Ultra Acquisitions Limited
has been launched by the government today.
Cobham Ultra Acquisitions Limited is a defence, aerospace and
communications company that was acquired by US private equity
firm Advent International Ltd (Advent) in January 2020.
The Business Secretary is minded to accept undertakings offered
by Cobham Ultra Acquisitions Limited to address the
concerns.
This decision follows advice from the Ministry of Defence.
The proposed undertakings are now out for public consultation
until midnight at the end of 3 July 2022, in accordance with the
process set out in the Enterprise Act 2002.
No decision will be taken by the Business Secretary until the
consultation has concluded and the representations have been
carefully considered.
The full text of the proposed undertakings can be found
on GOV.UK. In summary
they would deliver:
-
SecureCos: creating two new ‘SecureCos’, UK legal entities
which encompass the UK Ultra facilities that deliver the
sensitive capabilities to HM Government.
-
Board Representation: placing an HM Government-appointed
non-executive director on the Board of each SecureCo to
protect UK national security interests and provide oversight
of any disinvestment or divestment of sensitive capability.
-
Articles of Association: giving HM Government the right to
approve the Articles of Association of each SecureCo and
draft their strategic objectives which would transfer to any
future owner, locking that protection in. Any changes would
be subject to the HM Government Director’s agreement.
-
Step-In Rights: giving HM Government strong step-in rights
(similar to a “special share”), enabling transfer of
ownership of the SecureCos on national security grounds,
either to a third- party or the Government.
-
Access to Intellectual Property: giving HM Government the
power to access Intellectual Property and/or to transfer
knowledge or training necessary for HMG to exercise its
step-in rights effectively.
-
ITAR Protections: requiring Advent to institute an HM
Government-approved control plan to prevent International
Traffic in Arms Regulations controls applying to ITAR-free
products designed and manufactured by Ultra.
This decision on the national security considerations is separate
to any discussions on the economic implications of the proposed
merger.
The Business Secretary’s decision is made in a quasi-judicial
capacity, which means that he must act, and be seen to act, in a
scrupulously fair and impartial manner.
