With a new record in respect of UK air temperature likely to occur today and in the 26 years of writing commentary as a part of what I do professionally, my never having received so many emails asking for my view on political events in the UK yesterday or suggesting that they were looking forward to receiving my next commentary, there is no shortage of things to write about. Suffice to say patience is required and my views on UK political events this week in ‘New Dawn, New Day, New Hope (2) will follow when Prime Minister Boris Johnson has completed the team of ministerial announcements. For today, I will comment on two other issues – the agreed takeover of COBHAM by Advent International and separately, on the outgoing Chief of the Air Staff, Air Chief Marshal Sir Stephen Hillier.
Earlier this morning the UK defence company Cobham announced that it had agreed a $4 billion takeover from the US buyout group Advent International – a company that I would mention is also the owner of former UK engineering and now electronics company Laird Group and the bearing distributor Brammer.
At 165p per share and representing, as it does, a premium of 34.4% on Cobham’s 123p closing price last evening (and 50.3% premium to the average price of the shares over the past three months) this is an excellent deal for Cobham shareholders.
Unlike the unfortunate hostile takeover last year of GKN by Melrose that occurred last year and that I very fully and loudly opposed, the proposed agreed takeover of Cobham by Advent International should be seen as marriage. This is, in my view, a very good deal – one that will not only benefit Cobham shareholders but importantly, Cobham employees and the UK as a whole.
On the latter subject, I was somewhat appalled this morning to observe an unnecessary tweet from the CEO of the aerospace, defence and security trade association ADS. In the tweet Mr. Paul Everitt suggests that “as a major industrial asset [referring to Cobham], the new [UK] government should secure appropriate commitments from its buyers”. What nonsense this is – remarks such as these not only have no place but are in this case completely unnecessary. I fear that Mr. Everitt should better remember his place meaning that the job of a trade association is to support member companies, of which Cobham is one, rather than going against them.
So, I see this agreed takeover proposal as a marriage as opposed to a divorce. Commitment to retain the UK and US Head Office structure are in place and it is important to note that Cobham is already a very large player in the US defence industry.
While no one could argue that Cobham shareholders were, particularly during the period 2014 to 2017 treated quite disgracefully by one of the worst management teams that I have ever had the misfortune to come across, it is pleasing for me to be able to say that following their demise the current management team under David Lockwood have, over the past two years, rebuilt the company from the bottom up.
Under David Lockwood’s guidance Cobham is not just back to health but, as the interim results published today provide more than a sufficient hint, prospering. I am sure that under Advent’s ownership Cobham will continue to prosper and grow both in the UK, US, and internationally.
Air Chief Marshal Sir Stephen Hillier
My second point today is an opportunity to thank the outgoing Chief of the Air Staff, Air Chief Marshal Sir Stephen Hillier for the tremendous job of work that he has done over the past three years as CAS. The formal handover to his successor, Air Chief Marshal Mike Wigston, will I believe takes place tomorrow. Under Sir Stephen, the Royal Air Force has been strengthened not only in respect of equipment but also in respect of its people. ACM Wigston will tomorrow inherit a more invested and fit for purpose air force than the outgoing CAS had done three years ago and those of us who observe, comment and support the Royal Air Force or who serve are grateful for what ACM Sir Stephen Hillier has achieved. More of course still needs to be done and probably always will and we live in hope that Government is finally getting the message that spending on defence needs to rise.
When Sir Stephen was about to take over as CAS three years ago, I recall answering a straightforward question from him in respect of what I thought his priorities as CAS should be. My answer was simply – your people who I suggested felt demotivated and demoralised in the wake of the significant defence cut backs that had occurred since 2010. Whilst there are always issues left to resolve I can without any doubt say that those serving in the Royal Air Force today no longer feel as they did three years ago.
Thank you, Sir Stephen for what you have done and also for the superb range of events in respect of ‘RAF 100’ that you and your brilliant team steered through in 2018 on your watch. We wish you and Lady Elaine well in whatever you might eventually do.
CHW (London – 25th July 2019)
Howard Wheeldon FRAeS
Wheeldon Strategic Advisory Ltd,
M: +44 7710 779785