The UK government has ordered regulators to investigate the acquisition of British defence firm Ultra Electronics by a US private equity firm on the grounds of national security.
Ultra, which sells radars and other hi-tech electrical systems to the British military among others, is being bought by rival Cobham, which was acquired last year by US firm Advent for £4bn.
“The UK is open for business, however foreign investment must not threaten our national security,” business minister Kwasi Kwarteng said on Wednesday.
Earlier this week, Cobham agreed to buy Ultra for £2.6bn, although the deal faces significant scrutiny.
Amidst a buying frenzy of UK companies by private equity firms, this latest takeover has faced opposition because of the way that Cobham, which makes cutting edge air-to-air refuelling technology, has been broken up and sold off by its owner Advent since that deal was concluded.
Cobham has since been forced to agreed to a number of legally binding commitments to allay fears over the potential national security consequences of its acquisition of Ultra.
These commitments include maintaining a headquarters in the UK and investing more domestically.
Mr Kwarteng has now asked Britain’s Competition and Markets Authority to prepare a report on the proposed transaction, with a deadline of 18th January, 2022, in place.
The minister added that he would also try to stop Ultra from disclosing sensitive information to Cobham about the exact nature of its relationship with the UK government and its armed forces.
Sky News revealed last month that business secretary Kwasi Kwarteng had ordered officials to launch a national security investigation into the Ultra transaction.
