A number of UK companies working in the defence sector have either been bought or are about to be acquired by foreign competitors from the US. Following the sale of the Frazer-Nash Consultancy, working in the sphere of nuclear submarines and weaponry as well as supplying the Royal Navy, to the American KBR aerospace group, two more British firms have wound up on the verge of striking similar deals.
Namely, US defence company Cobham came close to buying the UK's Ultra Electronics – a Britain-based firm that produces noise control systems, precision control systems, as well as equipment for submarines, intelligence, and communications purposes. Ultra Electronics namely has contracts with the Royal Navy, but since 2005 one-third of the firm's revenue has come from contracts with the US. It has provided support equipment for McDonnell Douglas AV-8B Harrier II ground attack jets.
If the £2.57 ($3.56) billion deal gets approved by at least 75% of the company's shareholders, Ultra Electronics will become a part of Cobham. The latter has pledged to engage with Downing Street in order to agree to the terms of the acquired company's binding agreements. Cobham also vowed to keep already existing jobs in the UK, as well as to keep Ultra's headquarters in the country.
Another British defence industry company that is about to go under the hammer is Coventry-based Meggitt that supplies components and parts for the Royal Air Force's Typhoon jets. Nearly half of Meggit's revenue comes from contracts with the US. The American company Parker-Hannifin is currently eyeing purchasing Meggit for £6.3 ($8.72) billion, but could be challenged by another US-based firm – TransDigm, which plans to place its own £7 ($9.7) billion bid. Meggitt's shareholders will also have to approve the merger, just like their counterparts in Ultra Electronics.
The apparent sell-off of British companies linked to the defence industry has sparked concerns in Downing Street. UK Business Secretary Kwasi Kwarteng reportedly ordered to start an investigation into the deals on the grounds of them affecting the national security of the country. It is unclear at this time whether London will intervene and thwart any of the two upcoming deals.