A Cobham Falcon 20 plane on an operational readiness exercise
A Cobham Falcon 20 plane on an operational readiness exercise

Cobham, the UK aerospace and defence supplier, will be bought by US buyout group Advent International in a deal that values it at £4bn, becoming the latest public company to be snapped up by private equity.

It is the first high-profile takeover of a British company since Boris Johnson took over as prime minister on Wednesday.

The deal, which was first reported by the Financial Times, comes after the FTSE 250 group only recently found a firmer financial footing. The company issued a number of profit warnings between 2015 and 2017, sending its shares tumbling from their peak four years ago. 

Under the terms unveiled on Thursday, Cobham shareholders will receive 165p in cash, a premium of 34 per cent to the group’s closing price of 123p on July 24. It is a 50.3 per cent premium to the average share price over the past three months.

Cobham’s shares jumped 34.5 per cent to 165.4p following the announcement of the deal. 

Jamie Pike, Cobham chairman, said in a statement that the board believed Advent would “provide a credible and complementary partner for Cobham stakeholders”. 

The takeover of a UK defence industry supplier may spark political scrutiny, following the opposition to last year’s £8bn hostile takeover of engineering company GKN by turnround group Melrose Industries.

The sale of GKN, a manufacturer of aircraft and automotive components, drew criticism from politicians and trade unions who argued its sale to a turnround specialist could put jobs and investment in the British manufacturing sector at risk.

Cobham employs more than 10,000 people and makes critical components that it says are found in every Airbus passenger jet manufactured today, including satellite communication equipment and parts that prevent fuel tank explosions on the popular A320 aeroplane.

Advent is one of the biggest private equity firms, and recently raised $17.5bn in its largest flagship fund. It has been behind some of the biggest deals in the payments industry, including teaming up with Bain Capital to buy Worldpay, a card payment services provider, in 2010.

Alongside the deal, Cobham also released results on Thursday, reporting underlying operating profit rose 12 per cent to £107.1m. It gave investors reason for cheer this year when it promised to reinstate its dividend, following the resolution of a dispute with Boeing.

For Advent, the deal is its latest in the UK market. In 2018, it bought London-listed electronic components maker Laird for £1bn. Two years earlier, Advent acquired Brammer, the Cheshire-based distributor of industrial repair kits.

Dealmaking by private equity groups is set for the strongest year ever, fuelled by nearly $2.5tn of cash that buyout funds have raised from investors, as well as historically low borrowing costs. 

With additional reporting by Sylvia Pfeifer

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