Four weeks after Argentina invaded the Falkland Islands in 1982, a Royal Air Force Vulcan bomber attacked Port Stanley airport. It was a remarkable feat — the longest bombing mission at the time, made possible by ingenious use of air-to-air refuelling systems that kept the Cold War-era jet in the air for 16 hours.
The kit on the Vulcan and its attendant tankers was built by Cobham, a London-listed company with its headquarters in Dorset. If the RAF now wanted to call on Cobham to build a new system, it would have to go further afield.
The refuelling bit of Cobham has since 2021 been owned by the aerospace division of Eaton Corporation, a sprawling industrial conglomerate with its headquarters in Ohio.
Cobham also provided other types of specialist equipment and services for the British armed forces. Those operations are also now owned by non-British companies.
Draken International, based in Florida, has what was Cobham Aviation Services, which provides high-level training to the RAF, including in electronic warfare, while France’s Thales owns the former Cobham Aerospace Communications, which specialises in secure communications for military pilots.
None of this seemed to matter five years ago when the takeover of Cobham was waved through by the government. Advent International, the American private equity house, made a £4 billion offer that proved irresistible to the FTSE 250 company’s board.
There were calls for the deal to be blocked, notably from Lady Cobham, widow of Sir Michael Cobham, son of the company’s founder. The Competition and Markets Authority investigated potential risks to national security. No show-stoppers were found.
Advent got its deal after signing a series of undertakings to the government, accepted by Andrea Leadsom, then the business secretary. Within a few years Advent had broken Cobham up and sold most of its component parts to foreign aerospace and defence players.
Leadsom’s decision doesn’t look quite so obvious now. Defence has shifted from being an also-ran to the top priority for European governments, and there is going to be a scrabble for the type of expertise and technology that companies such as Cobham built up over decades.
Assumptions about the behaviour of allies have also changed dramatically. Five years ago it was hard to quibble about an American company buying up UK defence technology; the US was the cornerstone of Nato and our long-term ally. If we had an urgent issue, they would come running.
That might still be the case, but with Trump in the White House, would you bet on it? And if you think the commitments to the UK signed by Advent and the subsequent owners of Cobham’s divisions will take precedence over the wishes of the US government, then I have a bridge to sell you. If Trump decides in future to block the British purchase of US-controlled defence equipment, that will be the end of it.
The loss of one company probably doesn’t make much of a difference in the big scheme of things. Cobham, however, is only one of a gaggle of defence and aerospace companies that have been snapped up in recent years.
Advent came back for more three years ago, buying Ultra Electronics for £2.6 billion. Ultra is hardly a household name, but it provides very important pieces of equipment and technology to the Ministry of Defence, notably the sonar buoys crucial to hunting enemy submarines, and the control systems for the nuclear reactors on the Royal Navy’s submarine fleet.
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Again there was a security review, and a set of undertakings provided to the government, before the deal was approved. A repeat of the Cobham break-up may be on the cards. Bloomberg reported this week that Advent was exploring the sale of one of Ultra’s divisions.
To Cobham and Ultra can be added Meggitt, a FTSE 100 engineering group that supplies a range of kit to the Ministry of Defence, including clever automated systems for handling missiles, shells and bullets. It was bought by Parker, a US rival, for £6.3 billion a few months after Advent swooped on Ultra. There could be yet another deal in the offing. Chemring, which makes the defensive flares for fighter jets used to great cinematic effect in the Top Gun films, is is reported to have rejected an approach from another US private equity group, Bain Capital.
Chemring has another crucial asset in its portfolio: its Chemring Nobel division owns one of the few high-explosives manufacturing plants in Europe. It is presently working flat out as the continent’s armed forces struggle to replenish stockpiles run down to arm Ukraine.
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It is easy to be wise in hindsight, and bemoan the lack of strategic vision that allowed these crucial companies to fly the nest. That is pointless. Each of the decisions made sense in isolation and, if past administrations had thought the companies indispensable, they could have put them out of reach by taking a golden share similar to the arrangements that protect BAE Systems and Rolls-Royce.
Nor can elected politicians be expected to guard against every eventuality. The idea that the US might not be a good home for these businesses would in the past have been met with justified scorn. The weak relative performance of the London stock market also played a part, making it difficult for directors to say no to takeover offers at a decent premium to lacklustre share prices.
Ministers, however, should be aware of where the drip-drip diminution of UK ownership and control has left them. Some crucial cogs in the UK defence industry are now in foreign ownership, and may not always be able to be counted on in times of crisis. It makes the challenge of rebuilding our defence capability, and its likely cost, all the more daunting.
