Ultra Electronics will fall into US private equity hands after the Business Secretary backed a £2.6billion takeover.
It is being bought by Boston-based Advent International through its subsidiary Cobham – despite significant opposition from defence experts and MPs.
Kwasi Kwarteng was urged to block the deal amid fears of the hollowing out of the UK defence sector.
Cleared for take-off: The C-130 Hercules military aircraft uses Ultra Electronic’s technology
But he has set the stage for Ultra to be delisted from the London Stock Exchange and swallowed by Advent.
His clearance came after Advent agreed legally binding undertakings to protect national security, including creating two firms to cover Ultra’s most sensitive work, with a state-endorsed board director on each.
Ministers will have ‘strong step-in rights’, to secure any future change of owner.
It follows Advent’s £4billion takeover of Cobham in 2020, which led to the break-up of the defence group. Advent is buying Ultra through what is left of Cobham.
Independent analyst Francis Tusa said Cobham is just Advent disguised as ‘a wolf in sheep’s clothing’.
He said: ‘If this was an open and shut case, the deal would have been cleared last year. It is absolutely self-evident there is enough going on that the secretary of state did not know whether to clear it.
‘But let’s wait and see. Are we going to see Advent wash their hands of it like they did with Cobham?
‘They made a whole series of assurances and pretty much broke all those.’
He raised fears political turmoil would enable Advent to renege on agreements. Ultra makes submarine-hunting kit and is a world leader in sonar, radar and torpedo technology.
Ex-Tory leader Sir Iain Duncan Smith said he ‘does not understand’ why the deal is going ahead.
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