Advent to acquire Cobham for $5bn

October 2019 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

October 2019 Issue

In a deal that values the UK defence and aerospace group at $5bn, Cobham Plc is to be acquired by US private equity (PE) firm Advent International.

Under the terms of the acquisition, Cobham shareholders will receive 165 pence in cash for each Cobham share, representing a premium of approximately 34.4 percent. Cobham’s directors have recommended unanimously that its shareholders vote in favour of the transaction.

“We have worked intensively over the last two and half years to focus on our customers and our financial and operating performance,” said David Lockwood, chief executive of Cobham. “These fundamentals, along with the investment in the business Advent can provide, will enable us to leverage the quality of our products and services.”

Employing around 10,000 people and with customers and partners in over 100 countries, Cobham offers an innovative range of products and services to solve challenging problems in defence, aerospace and space markets. Its specialist capabilities include satellite communications, defence electronics, air-to-air refuelling, aviation services, life support and mission equipment markets.

“Cobham has leading positions in a number of attractive technology markets, with capabilities and know-how that are well aligned with our customers’ priorities,” said Jamie Pike, chairman of the Cobham board. “The Cobham management team’s turnaround actions over the last two and half years have begun to improve our performance, which is reflected in our 2019 interim results.

“Cobham Board is unanimously recommending the offer from Advent as it represents an opportunity for shareholders to realise their investment in Cobham in cash in the near-term,” he continued. “The offer represents a 50.3 percent premium to the average share price over the last three months. “We believe that Advent provides a complementary partner for Cobham’s stakeholders.”

One of the largest and most experienced global PE investors, Advent has invested in more than 345 buyout transactions in 41 countries. The firm has a strong track record of investing in high quality global industrial and engineering companies to achieve long term revenue and earnings growth, in domestic and international markets. As of 31 March 2019, Advent had $36bn in assets under management (AUM).

“We are pleased the board of Cobham has agreed unanimously to recommend the acquisition of Cobham by Advent,” said Shonnel Malani, a managing director of Advent International. “We strongly believe in the importance and potential of Cobham’s businesses and look forward to bringing our long track record of successful stewardship of companies to ensure that Cobham flourishes under our ownership.”

Advent’s track record of buying UK technology includes the acquisition of electronics company Laird for $1.65bn in 2018. Chief executive of Laird between 2012 and 2016 was Mr Lockwood.

Retained as legal adviser to Cobham is Allen & Overy LLP. Linklaters LLP and Weil Gotshal & Manges (London) LLP are retained as legal adviser and financing and antitrust and regulatory legal adviser to Advent, respectively.

The transaction is subject to receipt of relevant clearances from competition and regulatory authorities, in particular antitrust clearances in the US and the EU and foreign investment and regulatory approvals in the UK, Australia, France and Finland.

Mr Lockwood concluded: “Advent’s offer reflects the potential for future growth and improving performance, and is an endorsement of our turnaround strategy and our hard working people.”

Fraser Tennant