Britain accepts Ultra, Cobham’s undertakings on merger deal

(Reuters) – Britain on Wednesday accepted undertakings from both Ultra Electronics and rival Cobham, moving a step closer in approving the latter’s acquisition of the London-listed defence firm, after having raised security concerns over the deal.

“The government has accepted legally binding economic commitments offered by Cobham Ultra Acquisitions Limited to protect the future of Ultra Electronics Holdings plc in the UK,” the government’s Department of Business, Energy & Industrial Strategy said in a statement on Wednesday.

The UK government last month started a consultation process over the 2.57-billion-pound ($3.06 billion) deal, following advice from the ministry of defence, and said the business secretary “is minded to accept undertakings offered by Cobham” to address the concerns.

Britain had launched a probe into the deal in August last year on possible national security risks, even as Cobham committed to allaying any potential concerns

Ultra and Cobham, owned by U.S. private equity firm Advent, made several commitments including maintaining a corporate headquarters of the Ultra Group in the UK and to increase engineering research & development expenditure by at least 20% by the end of three years.

The parties also agreed to increase the number of UK-based engineering R&D full time employees (FTEs) by at least 15% and the number of UK-based manufacturing FTEs by at least 10% by the end of the three-year period.

($1 = 0.8399 pounds)

(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Shailesh Kuber)