BY Richard Summerfield
Cobham, the private equity-owned aerospace and defence group, has agreed to buy rival firm Ultra Electronics for $3.6bn in the latest takeover of a UK engineering specialist.
Under the terms of the deal, Ultra shareholders will receive £35 a share as well as an interim cash dividend of 16.2p due next month, valuing the company at £2.57bn. The price is a 63 percent premium to Ultra’s closing price on 24 June before the first bid from Cobham, at £28 a share.
“We believe Cobham and Ultra’s complementary capabilities delivering mission critical technology will be significantly enhanced through the combination of the two groups, enabling the development of higher performance solutions for our customers,” said Shonnel Malani, chairman of the Cobham Group. “We recognise the important role that a combined Cobham and Ultra will play in ‘five-eyes’ defence and are committed to protecting the continuity of supply to the UK and our allies. We look forward to working with HM Government, and other relevant stakeholders, to agree legally binding commitments which safeguard Ultra’s contribution to the UK economy and national security.”
“The Ultra Board is confident of Ultra’s future prospects as an independent listed company and its ability to deliver excellent and sustainable value for all its stakeholders,” said Tony Rice, chairman of Ultra. “The Ultra Board is also extremely pleased with the excellent progress that the management team is making on executing the ONE Ultra strategy and the Focus; Fix; Grow transformation programme. This was clearly recognised and part of the rationale behind Cobham’s interest in Ultra and enabled the Ultra Board to review Cobham’s unsolicited approaches from a position of strength.”
“This combination will enhance Ultra’s prospects through Cobham’s stated intentions to accelerate our transformation, invest in our technology, and to continue to support our customers, operations, communities, and most importantly our talented and committed people,” said Simon Pryce, chief executive of Ultra.
The UK government has been “closely monitoring” the potential sale of Ultra since the company’s board announced in July that it intended to recommend the takeover if Cobham could provide safeguards to the government and other stakeholders. To that end, Cobham has vowed to safeguard and support the UK’s national security and create new manufacturing and engineering jobs and apprenticeships. The company will also protect existing jobs, maintain a UK headquarters and boost investment in the country.
News: Defence firm Cobham to buy UK rival Ultra in $3.6 billion deal