- Offer maintained at £35 a share plus the interim dividend
- Promises to government include protecting local manufacturing and "sovereign UK capability"
Cobham has stuck with its £35-a-share offer for defence company Ultra Electronics (ULE), plus payment of the 16.2p per share interim dividend announced last month. Ultra’s board said Cobham would commit to “protecting existing and creating new UK manufacturing and engineering jobs”, and keep a UK headquarters.
The concrete offer is an improvement on the initial £28-a-share-bid in June from Cobham, the former London-listed defence company now owned by private equity firm Advent International.
The company’s share price was up 5 per cent in early trading, to 3,310p. It has traded below the £35 level since the higher offer was announced last month.
Cobham brought out director and former US Secretary of Defence Mark Esper, who served for just over a year under Donald Trump, to sell shareholders and the UK government on the deal. “It is essential that we have defence companies capable of meeting [US and UK] joint security needs,” he said. “The enhanced capabilities of a combined Cobham and Ultra promise to deliver significant benefits to both countries."
Ultra chairman Tony Rice said the “ very significant premium” to his company’s pre-offer share price should encourage shareholders to support it.
The board needs 75 per cent support for the deal at a shareholder meeting for the takeover to go ahead. The date for the meeting has not yet been set.
There is a risk the promises by Cobham won't go far enough to get the government onside, but the share price trading close to 3,500p shows there is plenty of confidence on this one. Shift from our previous buy rating to await documents, as the formal offer has arrived.
Last IC View: Buy, 2,166p, 28 Jun 2021
