UK defence firms must not be abandoned to unsuitable overseas predators, senior military figures, industry veterans and politicians warned this weekend.
Fears over the sale of some of Britain’s leading defence firms to US private equity barons have surfaced as Hampshire-based defence giant Chemring is being targeted by vulture capitalists.
US private equity firm Bain Capital has tabled a £1.1 billion bid for the 119-year-old defence group, raising concerns that the UK sector will lose another company to foreign owners.
Former stalwarts including Cobham, Ultra Electronics, Laird and Meggitt have been sold off in recent years.
The mooted Bain deal was branded a ‘classic case of buy, strip and flip’, by Lady Nadine Cobham, daughter-in-law of Sir Alan, the founder of the aerospace manufacturer, which was taken over by US private equity outfit Advent International in 2019.
She was referring to the private equity business model of buying businesses as cheaply as possible, stripping their assets and selling them on at a profit as quickly as possible.
Bemused: Lord Heseltine was a Conservative Defence Secretary
The UK is rushing to rearm itself along with the rest of Europe as the US military support that has been in place since the Second World War looks significantly less certain under President Donald Trump.
Critics say selling off key defence businesses to US buyers is inadvisable at a time when the UK needs to bolster its home-grown industry. Lord Heseltine, a Tory peer and Defence Secretary under Margaret Thatcher, said this weekend ‘no other country would allow this’, including the US.
He said Government should make more use of ‘golden shares’. These are stakes in firms considered vital for national security, such as BAE Systems and Rolls-Royce, that are held by Government and allow Ministers to block undesirable takeovers.
Heseltine added that any bid for Chemring should be ‘properly scrutinised’ by Ministers under the National Security and Investment Act.
Admiral Lord Alan West, former head of the Royal Navy, said he had ‘concerns’ about the looming takeover of another British defence business. He added that the sector is ‘particularly attractive and vulnerable’ to foreign raiders.
‘We need to think and look carefully at what we allow to happen in that area and maintain the right sovereign capability.
‘We should be ensuring that as much of the defence money we’ve got is being spent in this country helping create new jobs.’
The boss of Rolls-Royce, Tufan Erginbilgic, said Ministers might need to act if there was a risk that an overseas takeover would not be positive for Britain or that a new owner would not invest here.
He said in some cases, deals might be beneficial ‘but there may be some other examples where that is not the case and that is where the Government should step in and decide’.
The control of Britain’s defence industry has been brought into sharp focus by Keir Starmer after the Prime Minister unveiled plans last week to raise spending on the armed forces.
It comes amid fears Trump could withdraw US military protection after he criticised Europe’s perceived reliance on American firepower.
Former Tory leader Sir Iain Duncan Smith said ‘too many’ of the UK’s defence assets had been sold off already.
‘Our current production capability would have seen us lose the Second World War.
‘We should be looking to ramp up our security production,’ the MP said.
‘The stock market is there to raise capital but it’s not working. So instead, companies sell themselves to Americans to access US capital. We must block these deals and help these companies.’
Neither Bain nor Chemring has as yet commented officially on the bid speculation.
Founded in 1905, Chemring made equipment to change UK street lighting from gas to electric, before becoming a defence engineering specialist.
Today, it has customers across the world, including the RAF.
Lady Cobham said Bain was only interested in a takeover of Chemring ‘for its own financial reward’ and that it would not act ‘for the benefit of the employees or the wellbeing of the company.’
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