- Oops!Something went wrong.Please try again later.
Kwasi Kwarteng has paved the way for a US takeover of one of Britain's most sensitive defence companies after ordering his officials to explore a compromise that would allow it to go ahead without harming national security.
The Business Secretary has agreed to further talks with the private equity house Advent about its plans to buy Ultra Electronics, which makes equipment for the country's nuclear submarines.
Mr Kwarteng has chosen not to immediately refer the £2.6bn takeover for an in-depth investigation by the Competition and Markets Authority (CMA), which has given him an initial report on the sale.
Instead, he is allowing Advent more time to discuss its plans with Whitehall in the hope of finding acceptable security guarantees.
Advent – which is buying Ultra through Cobham, a British defence company that it already owns – is understood to be considering concessions such as an effective golden share in the company that would secure the most sensitive military technology for the UK.
Other options could be separate boards for the top-secret parts of the business, with separate reporting lines between managers handling secrets, and the offer of a closer relationship with government officials when it comes to sales and commercial relationships.
Mr Kwarteng could still trigger a so-called phase two investigation, his department said, if the Government is not won over by the offer. Insiders are hopeful a purchase can be agreed by August.
Ultra said that it “continues to offer its full support to Cobham to refine and agree those undertakings... at the earliest opportunity, with the objective of obtaining clearance of the acquisition”.
The deal is controversial partly because Advent has sold much of the Cobham business that it bought in 2019.
It complied with promises made at the time which included a pledge that at least half the directors would be British and that a UK national would control so-called “List X” work on secret British military technology.
A spokesman for the Business Department said: “In the light of recent proposals by Cobham, the business secretary has asked officials to work with Cobham and Ultra to further explore the possibility of undertakings in lieu of a Phase 2 investigation.
“He will then consider any suitable undertakings and decide whether it would be appropriate to refer the transaction to the Competition and Markets Authority for a more detailed Phase 2 investigation.”