* UK issues intervention notice
* Deal could be delayed on security grounds
* Advent says will cooperate with government
(Adds background, reaction)
By Kate Holton
LONDON, Sept 18 (Reuters) - Britain will investigate the
national security impact of the purchase of defence company
Cobham by U.S. private equity firm Advent International,
potentially delaying or even blocking the $5 billion deal.
Business minister Andrea Leadsom's move on Wednesday is not
unusual where there are potential security concerns and follows
British government intervention in the pending acquisition of
satellite group Inmarsat, by an international private
equity consortium which includes U.S. firm Warburg Pincus.
Leadsom has issued a European intervention notice, calling
for a report from the Competition and Markets Authority (CMA) by
Oct. 29 to determine whether Cobham, the maker of air-to-air
refuelling equipment, should be sold.
The CMA could decide to undertake a lengthy inquiry due to
Cobham's role in supporting aircraft such as the F-35 Joint
Strike Fighter and Eurofighter Typhoon as well as advanced naval
vessels, satellites and military vehicles.
Other deals investigated on national security grounds have
often been cleared after undertakings from the buyer.
"The CMA will now prepare a report on the national security
aspects of the proposed transaction," the business department
said. "This is a statutory process to ensure national security
implications of a proposed sale are fully assessed."
One of the most open economies in the world, Britain has
sold some highly innovative firms to foreign buyers in recent
years, including the semiconductor designer Arm to Japan's
Softbank and pay-TV group Sky to Comcast.
The London Stock Exchange is trying to fend off a $39
billion takeover approach launched this month by Hong Kong
Exchanges and Clearing.
SPECIAL STATUS
Cobham, launched in the 1930s by a British adventurer and
explorer, employs 10,000 people. It has struggled in recent
years, issuing a string of profit warnings in 2016 and 2017.
Advent has a track record in buying British technology,
having snapped up electronics company Laird for $1.65 billion
last year, and Cobham investors approved the takeover on Monday.
Some Cobham operations, such as its Advanced Electronic
Solutions unit, have special security agreement status that
allows them to bid for U.S. defence contracts.
Cobham Chief Executive David Lockwood said on Monday that
requirement would disappear under Advent ownership, enabling the
group to combine infrastructure and share knowledge more quickly
and easily within the company.
Lockwood said he had already held some discussions with
government about the takeover but would not go into details.
"Advent is committed to being a responsible steward of
Cobham, encouraging its future growth and success," a spokesman
for the U.S. group said. "We will continue to engage
constructively and cooperatively with the UK Government in this
part of their review."
Cobham shares slipped 0.5%, with the stock at 160 pence per
share, just below the offer price of 165 pence.
(Reporting by Kate Holton; editing by James Davey and Alexander
Smith)
