LONDON — The British government has signaled it will give the green light to a £4 billion (U.S. $5 billion) takeover that would see local defense contractor Cobham acquired by a U.S.-based private equity company.

Business Secretary Andrea Leadsom announced Nov. 19 that she was “minded to accept” the proposed takeover but would put out for public consultation assurances given by Advent International regarding British security concerns before making a final call.

Advent moved to buy Cobham in July securing the approval of 93 percent of shareholders in the Wimborne, southwest England-based contractor best known for its world leading role of air-to-air refueling technology.

Cobham’s annual turnover of £1.86 billion took it to 57th place in the Defense News Top 100 companies listing earlier this year.

Over 50 percent of its revenues were generated in the United States where the company has substantial manufacturing facilities.

The British government intervened in the takeover in September following criticism led by Nadine Cobham, whose father-in-law formed the company in 1935. Members of Parliament also raised security concerns over the sale.

The government has spent the last few weeks reviewing the proposed acquisition ahead of Leadsom outlining the government's current position.

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"Following my update to Parliament on 5. November, I have now reviewed further national security advice from the Ministry of Defence and met with both Cobham and Advent, who have offered legally binding undertakings designed to mitigate national security concerns, which I am minded to accept.”

"They will now be considered by a public consultation, and I will provide a further update once that process has concluded,” said Leadsom.

The consultation closes Dec. 17 – five days after the general election.

The assurances include Advent giving the MoD prior notice of plans to sell off parts or all of Cobham, agreeing to honor the terms of existing contracts. In addition, the new owners would have to ensure existing security arrangements are strengthened and maintain the ability to supply key services for five years.

Nadine Cobham has previously said assurances were not worth the paper they were written on.

Alex Ashbourne-Walmsley, a defense consultant at ASC here in London, said she thought Leadsom had taken the right decision on the Cobham sale.

“It’s advisable for the government to respect the clear instructions of the Cobham shareholders. It is sensible, however, for government to build in conditions regarding any future sale of parts of the business. Private equity houses, unlike traditional industrial corporations, tend to take the shorter-term, more profit-driven view of disposal of their acquisitions, rather than considering matters such as national security of supply and the wider strategic interest,” she said.

Criticism over the proposed acquisition of an important part of the British defense industry follows the controversial takeover last year of GKN by Melrose, another private equity company.

Despite the furore over the Cobham sale the Financial Times said today the assurances sought by the government from Advent were weaker than those demanded to wave the GKN deal through.

Andrew Chuter is the United Kingdom correspondent for Defense News.

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