Britain to investigate $5 bln U.S. takeover of defense firm Cobham

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The government has opened a probe into the proposed takeover of United Kingdom defence company Cobham (COB.L) by U.S. private equity giant Advent International.

In a rare move, Andrea Leadsom, the business secretary, has instructed the Competition and Markets Authority to investigate the takeover of Cobham, a world leader in systems for planes to refuel in mid-air, by Advent International.

Leadsom has issued a European intervention notice, calling for a report from the British Competition and Markets Authority (CMA) by October 29 to determine whether Cobham, the maker of air-to-air refueling equipment, should be sold.

'The government's goals are to support private sector innovation whilst safeguarding the public interest, ' Leadsom said.

Cobham's pioneering air-to-air refuelling technology is used on all western fast jets but it is also a key supplier of components for the F-35 fighter and to the United States military's electronic warfare and radar capability.

Cobham investors on Monday backed the US firm's bid with a 93% majority after critics including Lady Cobham, daughter-in-law of the company's founder, campaigned for it to be rejected.

Advent International made the offer to snap up Cobham in July and shareholders approved the deal on Monday.

"Advent is committed to being a responsible steward of Cobham, encouraging its future growth and success", a spokesman for the USA group said.

Cobham shares slipped 0.5%, with the stock at 160 pence per share, just below the offer price of 165 pence. We will continue to engage constructively and cooperatively with the United Kingdom government in this part of their review'.

Should the CMA find there are sufficient concerns over national security fears then the British government can veto the deal.

Neil Wilson, an analyst at Markets.com, said the Government's intervention was 'always a risk as regulators and politicians are more sensitive to foreign takeovers'. He said some Cobham units have special security agreements that allow them to bid for USA defense contracts, but the acquisition by Advent would streamline requirements and improve efficiency.

"This may well include air-to-air refuelling, which is a real shocker".

The London Stock Exchange is trying to fend off a $39 billion takeover approach launched this month by Hong Kong Exchanges and Clearing.

A source close to Whitehall told the Daily Mail that officials would intervene in the £32billion deal if it becomes clear that LSE shareholders are likely to back it.

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