Weak pound allows Advent International to win US$5bn battle for U.K.’s Cobham

With the Brexit fiasco primarily responsible for a weak pound, U.S. private equity firm Advent International has taken advantage of the situation and snapped up Cobham, the U.K. firm renowned for its pioneering work on air-to-air refueling, for US$5 billion. The price agreed was at a premium of 50% of the average monthly share price over the last three months prior to the deal’s announcement.

Cobham employs around 10,000 staff responsible for making its air-to-air refueling systems as well as communication for military vehicles. Today its technology is used in the F-35 Joint Strike Fighter and the Eurofighter Typhoon, together with advanced naval vessels and satellites. However, Cobham has struggled since the company’s foundations were shaken by profit warnings in 2016 and 2017 that resulted in the raising of cash from shareholders. Since then Chief Executive David Lockwood had instigated measures to improve financial performance, much of which had been successfully implemented.

In response to shareholder claims that the company had succumbed to Brexit-created problems, Cobham Chairman Jamie Pike said the board had undertaken a very rigorous analysis of Cobham’s value. “We felt that 165 pence was very adequate recompense for the future prospects for the business,” he said. “We don’t accept that we took a short-term view of the future of the business.” He added that the board had made significant efforts to encourage rival bids, but that there was no other suitable candidate. Lockwood said there was only one decision the board could take, though he acknowledged there was some emotional impact in seeing a British technological leader bought by U.S. private equity.

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