Ultra Electronics’ purchase further diminishes UK defense market, says GlobalData

Following the news that Ultra Electronics has agreed a £2.6bn takeover by US owned Cobham;

Madeline Wild, Associate Defense Analyst at GlobalData, a leading data and analytics company, comments:

“The purchase of Ultra Electronics by US-owned Cobham will leave many questioning the current position of the UK defense market, alongside ongoing concerns related to the national security implications of the sale. In 2019, Cobham, then UK-owned, was sold to a US private equity firm in what was a massive blow to the UK defense market. There are fears that the loss of another major British defense company will weaken the position of UK defense even further, with the sale of a key supplier to the Royal Navy to the US.

“This comes less than a month after Ultra released its positive H1 2021 results, which showed both a strong performance and resilience against the pressures of COVID-19 and Brexit. The push for innovation and development of new technologies by Ultra has provided opportunities for valuable contracts for the company abroad, including the recent award of six contracts to Ultra by the Canadian Department of National Defence. Thus, if approved by the UK Government, the loss of Ultra Electronics will be felt keenly by the British defense market.

“Ultra Electronics is a key contributor to the protection of national security and while Cobham has made assurances to the UK Government that steps will be taken to protect this role, there is still concern over the acquisition. Subsequently, an investigation is to be launched under the Enterprise Act before the sale is confirmed, to ensure that the buy-out does not impact national security.

“The UK’s monitoring of the sale follows FDI changes made in late 2020 that safeguard defense technology development and protect the development of emerging technologies from being acquired by foreign investors. Given the work done by Ultra Electronics it can be expected that the sale will be closely scrutinised by the government.”

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