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20 Aug 21. Nvidia deal for Arm raises ‘serious competition concerns’, says UK watchdog. CMA recommends in-depth investigation into planned $54bn takeover of British chip designer. The Competition and Markets Authority said the deal could ‘stifle innovation across a number of markets.’ The UK competition watchdog has recommended an in-depth investigation into Nvidia’s planned $54bn takeover of British chip designer Arm, saying there are “serious competition concerns” about the deal. The Competition and Markets Authority (CMA) on Friday published the findings of a report to the government in which it said the deal could “stifle innovation across a number of markets”. Nvidia, the US chip maker, struck a deal with SoftBank, the Japanese investment conglomerate, to buy Arm last September for $40bn in shares and cash. The deal is now worth $54.3bn after a rise in Nvidia’s share price. But the deal faces regulatory hurdles across the world, and Nvidia has recently admitted it will not complete the deal within its original 18-month timeframe. In a recent interview with the FT, Nvidia’s chief executive Jensen Huang said he remained “confident” that it would close by the end of 2022. The UK has already referred the deal for a national security review and the EU is likely to open an in-depth investigation into the deal in days or weeks, said people with knowledge of the matter. Nvidia has only recently begun the process of seeking clearance in China, where Arm remains locked in a dispute with the head of its Arm China joint venture. The CMA said it had received “a substantial number of detailed and reasoned submissions from customers and competitors” complaining about the proposed deal. It concluded that since Arm’s designs are very widely licensed to other chipmakers, the deal could give Nvidia the ability to harm its rivals by restricting their access to Arm’s technology — something Nvidia has denied it would do. Nvidia offered a “set of behavioural remedies” to appease the regulator, but the CMA said it “did not believe any form of behavioural remedy would address the competition concerns” it had identified. CMA chief executive Andrea Coscelli said on Friday: “We’re concerned that Nvidia controlling Arm could create real problems for Nvidia’s rivals by limiting their access to key technologies, and ultimately stifling innovation across a number of important and growing markets. This could end up with consumers missing out on new products, or prices going up.” The CMA said innovation could suffer in a wide range of areas, including data centres, gaming, the “internet of things” and autonomous vehicles. Oliver Dowden, the culture secretary, must now decide whether to open an in-depth probe based on both national security and competition concerns, or hand back control to the competition watchdog to take it forward as a normal “phase 2” merger investigation. Nvidia said in a statement: “We look forward to the opportunity to address the CMA’s initial views and resolve any concerns the government may have. We remain confident that this transaction will be beneficial to Arm, its licensees, competition, and the UK.” Recommended Nvidia Nvidia admits bid for Arm likely to stretch beyond 18-month deal timeframe Huang previously said he had no intention of “throttling” or “denying” Arm’s technology to any customer, and pledged to maintain Arm’s open licensing model. In a letter to the FT, Huang said Nvidia would “continue to support all of Arm’s customers, making Arm technology available to the whole marketplace”. (Source: FT.com)
19 Aug 21. Arlington Capital Partners’ Portfolio Company, BlueHalo, Bolsters Technical Capabilities and Intellectual Property with the Acquisition of Intelligent Automation, Inc.. Arlington Capital Partners (“Arlington”) today announced that its portfolio company, BlueHalo (the “Company”), a leading provider of advanced engineering solutions and technology to the national security community, has entered into a definitive agreement to acquire Intelligent Automation, Inc. (“IAI”).
Based in Rockville, MD, IAI provides advanced technology development and productized solutions in the fields of AI/ML, cybersecurity, hypersonics, space, 5G, data analytics, and RF/communications. IAI has leveraged its highly credentialed employee base, including more than 75 PhDs, and a substantial intellectual property portfolio into a repeatable model of progressing R&D and prototyping initiatives into market-focused products and customer-driven solutions serving a variety of customers across the DoD and commercial markets.
BlueHalo is a rapidly expanding national security platform with capabilities spanning space superiority, directed energy, missile defense, C4ISR, cyber, and intelligence. Following the Company’s recently announced expansion of its Albuquerque operations into a new state-of-the-art 200,000 sq. ft. facility, the acquisition of IAI reinforces BlueHalo’s commitment to innovation, adding significant depth across the Company’s existing portfolio of products and solutions. IAI’s impeccable track record of productizing solutions through advanced R&D programs will enhance BlueHalo’s ability to rapidly field mission critical technologies into the hands of the warfighter. With more than 30 distinct product lines, BlueHalo will continue to provide its customers with leading-edge technologies across the full spectrum of national security priority areas.
“IAI has spent the last three decades building a premier platform focused on bringing innovation to market. With nearly one third of their workforce having PhDs, IAI has an incredibly deep bench of world-class scientists, developers, and engineers, and we at BlueHalo could not be more excited to partner with the IAI management team as we continue to expand our capabilities across areas critical to national security,” said Jonathan Moneymaker, CEO of BlueHalo. “Encapsulating BlueHalo’s mission areas with IAI’s world-class multi-domain AI/ML based technologies will accelerate and enhance BlueHalo’s trajectory while creating a repeatable, sustainable engine of innovation.”
“When we began IAI 34 years ago, we knew we wanted our business to be built around the superior quality of our technical work, outstanding service to our customers, and an impeccable work environment with an excellent professional staff. We are pleased that BlueHalo will continue to support these pillars in its acquisition of IAI. We are confident that together they will produce an even stronger generation of significant new technology,” said Drs. Leonard and Jacqueline Haynes, founders of IAI.
David Wodlinger, a Partner at Arlington Capital Partners, said “We are proud to partner with the IAI management team to continue building upon the strong foundation that they have established based on deep customer intimacy, highly technical research and development capabilities, and an extensive portfolio of proprietary products. We believe that IAI is a great fit for BlueHalo as one of our core capabilities as a company is utilizing our resources, whether they be labs, facilities, technical reach-back, systems and processes, or intellectual property to enhance and mature promising next generation solutions into capabilities and products to address some of the most technically demanding challenges facing the national security community.”
Vikram Manikonda, CEO of IAI, shared, “From the outset, the alignment of cultures has been clear between our two businesses. Collectively we are a culture of inspired engineering seeking to solve some of the nation’s most challenging problems. Joining forces with BlueHalo provides IAI the opportunity to not only continue its tradition of innovation, but work on a much broader set of problems and challenges. The entire IAI team and I are incredibly excited about this partnership and for the opportunities for innovation, accelerated growth, and product development that lie ahead of us.”
Henry Albers, a Vice President at Arlington Capital Partners, said “IAI has a storied history of leading groundbreaking research and operationalizing cutting-edge technology for the national security community. We believe that the company’s highly talented employees will thrive at BlueHalo, enhancing the capabilities and culture of the overall enterprise.”
Raymond James & Associates, Inc. acted as the investment banking advisor to IAI in this transaction. Sheppard, Mullin, Richter & Hampton served as legal advisor to BlueHalo and Miles & Stockbridge served as legal advisor to IAI.
About BlueHalo
BlueHalo is purpose-built to provide industry-leading capabilities in the domains of Space Superiority and Directed Energy, Air and Missile Defense and Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR), and Cyber and Intelligence. BlueHalo focuses on inspired engineering to develop, transition, and field next generation capabilities to solve the most complex challenges of our customer’s critical missions and reestablish our national security posture in the near-peer contested arena. www.bluehalo.com
About Arlington Capital Partners
Arlington Capital Partners is a Washington, DC-based private equity firm that is currently investing out of Arlington Capital Partners V, L.P., a $1.7 bn fund. The firm has managed approximately $4.0 bn of committed capital via five investment funds. Arlington is focused on middle market investment opportunities in growth industries including government services and technology, aerospace & defense, healthcare, and business services and software. The firm’s professionals and network have a unique combination of operating and private equity experience that enable Arlington to be a value-added investor. Arlington invests in companies in partnership with high quality management teams that are motivated to establish and/or advance their Company’s position as leading competitors in their field. www.arlingtoncap.com (Source: BUSINESS WIRE)
19 Aug 21. SAIC Awarded $664m in Intelligence and Space Contracts, Including Major Digital Engineering Program. Science Applications International Corp. (NYSE: SAIC) has secured $664m in fiscal year 2022 second quarter contract awards by space and intelligence community organizations, including a program providing digital and systems engineering solutions for intelligence and defense agencies worth $355m.
Most of these contracts serve customers in the intelligence community and classified space domain that rely on SAIC for highly-specialized expertise in digital engineering as well as cloud, artificial intelligence, cybersecurity, technology integration, engineering, IT modernization and mission operations.
This quarterly total also includes a previously-announced $90 m award by the U.S. Air Force Life Cycle and Management Center, Force Protection Division to help the U.S. Department of Defense Combatant Commands mitigate small unmanned aircraft systems threats and protect U.S. forces.
“These awards underscore the confidence our customers hold in SAIC,” said Michael LaRouche, president of SAIC’s National Security and Space Sector. “We are a recognized leader in delivering solutions across government and feel privileged to support these intelligence and classified space community missions. We look forward to continuing to help our customers harness the power of digital engineering, cloud, AI, cybersecurity innovation and more with new ideas, bold objectives, and innovative solutions to meet their extremely complex challenges.” (Source: BUSINESS WIRE)
19 Aug 21. ASX-listed cyber security company Tesserent confirmed the strategic acquisition of Loop Secure, having signed a share purchase agreement this week. The strategic acquisition of Loop Secure forms part of the company’s acquisition-supported growth strategy, having acquired cyber security businesses Pure Security, Seer Security, Airloom, iQ3 and Lateral security. According to a statement released by the company, the acquisitions made Tesserent Australia’s larges listed cyber security company.
Sydney based Loop Secure provides managed security services, GRC and Offensive Security services, with offices also located in Melbourne and Brisbane. The company’s Melbourne Security Operations Centre oversees a range of Australian and international clients.
It is hoped that the acquisition will enable Tesserent to enhance the company’s Cyber 360 capabilities and increase their growth yet further, with Loop Secure recording a 2020-2021 unaudited revenue of $18 m and $2.25 m in sustainable EBITDA.
The acquisition was undertaken with a mix of cash and Tesserent shares.
Geoff Lord, chairman of Tesserent, welcomed that acquisition.
“The addition of Loop Secure to the TNT group is a welcome one, cementing our position as the leading ASX-listed provider of cyber security solutions and services in ANZ and as well as contributing to our annual turnover and adding significant recurring revenue to the Group,” Lord said.
Adam Davenport, chairman of Loop Secure, noted that the acquisition will help Loop Secure continue to grow its offerings.
“After more than 15 years as a leading cyber security firm, I am delighted Loop Secure will become part of the Tesserent Group. The transaction provides Loop with immediate access to substantial resources and new opportunities and will allow us to continue our strong growth in the key cyber security domains of monitoring, consulting and solutions,” Davenport said. (Source: https://www.cybersecurityconnect.com.au/)
18 Aug 21. UK to probe U.S. private equity purchase of defence firm Ultra. Britain said it will investigate possible national security risks from the planned 2.6bn-pound ($3.6bn) acquisition of defence firm Ultra Electronics by rival Cobham, which is owned by U.S. private equity firm Advent. Customers of Ultra, which sells torpedo and radar systems and a range of defence communication equipment, include the British and U.S. governments.
Cobham set out commitments to address concerns over potential national security implications of its takeover of Ultra when it announced an agreement for the acquisition on Monday. read more
“The UK is open for business, however foreign investment must not threaten our national security,” business minister Kwasi Kwarteng said on Wednesday.
He said he had asked Britain’s Competition and Markets Authority, a regulator, to prepare a report on the proposed transaction.
The government said the deadline for the report was Jan. 18, 2022.
Kwarteng said he would seek to stop Ultra from disclosing sensitive information to Cobham about the goods or services it provides to Britain’s government and its armed forces.
Advent declined to comment and instead referred to Cobham’s statement on Monday which included the offer of legally binding commitments on Ultra including safeguarding national security, maintaining a headquarters in Britain and investing more in the country.
Britain’s government said in July it was closely monitoring Cobham’s bid for Ultra.
Another British aerospace and defence group, Meggitt (MGGT.L), has received bids from American companies Parker-Hannifin (PH.N) and TransDigm (TDG.N).
Private equity firms have been on a buying spree in Britain, including a $9.5bn bid underway by Fortress Investment Group for British grocery chain Morrisons (MRW.L).
Buyout groups spent $45bn on companies in Britain in the first half of 2021, according to Refinitiv data, more than double the next highest amount for any January-June period. ($1 = 0.7274 pounds) (Source: Reuters)
18 Aug 21. IAI reports booming Q2 as IPO approaches. Israel Aerospace Industries (IAI) revealed its second quarter (Q2) and first half financial results for 2021 on 17 August, with sales and profits both surging to record levels for the company. Sales increased in Q2 2021 to USD1.15bn compared with USD1.06bn in Q2 2020. Overall sales for the first half were up by 4.1% to USD 2.16bn, compared with USD2.08 bn in the first half of 2020. The increase in sales was largely attributed by the company to increases in the Systems, Missiles, and Space Group helping to offset reductions in the Aviation Group. Gross profits for the company increased 13.5% in Q2 to USD185m, up from USD163m on Q2 of 2020. First half profits had also increased to USD351m, compared to USD333m in the first half of 2020. The company’s Military Group recorded a 7.5% increase in gross profits for the first half of the year to USD314m, up from USD292m, with the company’s Aviation Group accounting for USD30m in gross profits for the period. According to the company, the overall order backlog at the end of June 2021 was USD12.4bn, a slight decline on the USD12.6bn at the end of 2020. Of this orderbook, 79% is for export customers across a “geographically dispersed” basis. The company is also preparing for an Initial Public Offering (IPO) to be launched by the end of the year. The floatation will be for a minority stake and is expected to be for 25% of the company, but potentially with the authority to expand to up to 49% from government regulators. (Source: Jane’s)
18 Aug 21. TransDigm signals readiness to pursue Meggitt takeover. US engineer made unsolicited bid after UK group had agreed deal with rival Parker Hannifin. Meggitt has demanded a series of commitments from Parker Hannifin on protecting local jobs and investment. TransDigm has given the strongest indication yet that it intends to make a formal bid for UK aerospace and defence group Meggitt, which has already agreed a deal with a rival US engineer. Kevin Stein, chief executive of the Ohio-based aircraft parts group, said that while he could not comment in detail on the company’s plans, it was interested in buying “good solid assets in the aerospace world”. “We don’t do things of a frivolous nature. We are serious about aerospace and about turning good businesses into great ones,” he said. The comments are the first time that Stein has spoken publicly since it was revealed by Meggitt last week that TransDigm had made an unsolicited preliminary offer of 900p, 100p more than an agreed bid from rival US group Parker Hannifin. The UK Takeover Panel on Monday set a deadline of September 14 for TransDigm to make a formal bid or walk away. TransDigm’s interest has triggered concerns in some quarters that the US group, which talks unapologetically about its ambition to offer “private-equity style returns” to its investors, could break up Meggitt. Its business practices have also been scrutinised in the US, after a report in 2019 by the US Department of Defense’s inspector general found that the company had overcharged taxpayers on a number of contracts between January 2015 and January 2017. The UK government is known to be looking at the current spate of takeover bids in the defence sector, including the bid for Ultra Electronics by private-equity owned Cobham. Meggitt, which has pushed ahead with the sale to Parker Hannifin, setting a date of September 21 for a shareholder vote, has demanded a series of commitments from the US company on protecting local jobs and investment. Stein defended TransDigm’s business model, insisting that the company was a long-term owner of aerospace businesses. He declined to comment on whether TransDigm was prepared to make comparable commitments if it did bid for Meggitt but stressed that the company was a “long-term investor in the UK . . .[that] understands what it takes to be successful”. Shares in Meggitt have traded above 800p since TransDigm’s interest emerged, suggesting that the market believes that the US group will make a firm offer. They closed at just under 820p on Tuesday. TransDigm has been operating in Britain since 2012 and has 2,000 staff at nine sites. In January, it bought Cobham’s radios and antennas business for just under $1bn. Stein said TransDigm intended to “triple the capital investment” in the business. Recommended Bryce Elder History suggests no hidden agenda behind Parker’s bid for Meggitt He said he had spoken to Kwasi Kwarteng, Britain’s business secretary, at the time of the Cobham purchase, telling him that “we would give him a letter, we would make whatever commitments are necessary”. Stein conceded, however, that the commitments in the letter were not legally binding but added: “I understand the governments in these requests. We are long-term buyers in the UK market and we understand the need to continue to invest in MoD, Home Office programmes and projects to maintain a defence capability in the nation.” Stein also defended TransDigm’s relationship with the US government. The company paid the government $16.1m in the wake of the report by the defence department’s inspector general, but noted that it had followed all the laws. “You don’t want one of your largest customers upset with you. It was voluntary. We wanted to show the government that we wanted to help,” Stein said. (Source: FT.com)
16 Aug 21. Science Group PLC, TP Group PLC. Statement regarding TP Group plc. Following the announcement by TP Group on 10 August 2021 and Science Group’s response of the same date, Science Group requested that TP Group provide information to enable Science Group to consider whether or not to make an offer to acquire TP Group. With a track record of delivering value to shareholders, a strong balance sheet and clear operational synergies with TP Group, Science Group is a credible British, London-listed partner for the Company.
An indicative proposal was made via advisors on the morning of 12 August and confirmed in writing on 13 August 2021, potentially offering a significant premium to the TP Group share price of 3.9 pence prior to Science Group’s investment. This proposal requested due diligence information and agreement to an extension of the current offer timetable to enable Science Group to complete its evaluation. The Board of TP Group notified Science Group late on 15 August that the proposal was rejected without any discussion or engagement.
In the context of the financial performance of TP Group, the obstructive approach of the TP Group Board is indefensible. On 28 July 2017, TP Group completed a £20.8m fund raising at 6.5 pence per share. On 6 August 2021, the last trading day prior to Science Group’s share purchase, the closing mid-market share price of TP Group was 3.9 pence. In the 2020 Annual Report, the Board and the Company’s independent auditors highlighted TP Group’s poor financial position including the uncertainty for the Group and the Company to continue as a going concern. All of the current directors of TP Group plc, except the new CEO, were appointed prior to the July 2017 fund raising and have therefore presided over the value deterioration over the past four years.
For the avoidance of any doubt, Science Group has not withdrawn its interest in potentially making an offer for TP Group. However while Science Group believes there are considerable benefits for all stakeholders from a combination of the organisations, with the uncertain financial position of TP Group, it is unlikely that Science Group will be able to make an offer if the TP Group Board continue to refuse to cooperate. Science Group continues to encourage the Board of TP Group to engage in a constructive manner.
Alternatively, as outlined in the announcement on 10 August, the initial approach to TP Group by Science Group was in relation to a potential strategic investment. Science Group is now the third largest shareholder in TP Group and, for the avoidance of doubt, is not interested in considering any offers for its stake from third parties. In the event that the Board of TP Group persist with their refusal to cooperate, and as a result Science Group is unable to make an offer for TP Group, Science Group will retain its shareholding as a strategic investment. Science Group may or may not make further share purchases in the market. Science Group will adopt an active engagement strategy in managing its investment.
The strategic investment model must now be considered an increasing possibility. Accordingly, in view of the conduct of the TP Group Board which, as a large shareholder in TP Group, Science Group considers to be wholly unacceptable and not in the best interests of TP Group shareholders and other stakeholders, Science Group has today written to the Board of TP Group requesting that a General Meeting be called in order to enable TP Group shareholders to consider the:
- Removal of Mr Andrew McCree as a director;
- Removal of Mr Jeremy Warner-Allen as a director;
- Appointment of Mr Martyn Ratcliffe as a director; and
- Appointment of Mr Peter Bertram as a director
17 Aug 21. Directors in line of fire as TP Group takeover bid turns sour. A Cambridge-based science services group is seeking to remove two directors from a fellow Aim-quoted company after its takeover attempt was rebuffed.
Science Group said yesterday that it had written to the board of TP Group requesting that a general meeting be called in an attempt to oust Andrew McCree, its chairman, and Jeremy Warner-Allen, a non-executive director, after it accused the board of “wholly unacceptable” conduct in its handling of Science Group’s takeover attempts.
Science Group, TP Group’s third largest shareholder, also wants to appoint Martyn Ratcliffe, its chairman and largest shareholder, and Peter Bertram, an independent director, as directors on TP Group’s board.
Science Group made an indicative proposal on Thursday, which it confirmed in writing the next day, “potentially offering a significant premium to the TP Group share price of 3.9p prior to Science Group’s investment”.
It said that the proposal requested due diligence information and agreement to an extension of the present offer timetable to enable Science Group to complete its evaluation. However, TP’s board notified Science Group late on Sunday that the proposal had been rejected “without any discussion or engagement”.
Science Group is a services and product development company, with three divisions. It is valued at about £182m on the Aim, London’s junior stock market. TP is an equipment, software and services business for industries including defence, space and security. It is valued at £39.7m on Aim. TP’s shares closed down 3.7 per cent, or ¼p, at just over 5p.
Science Group said that in the “context of the financial performance of TP Group, the obstructive approach of the board is indefensible”. It noted that TP Group had completed a £20.8m fundraising in July 2017 at 6½p per share, but this month, before Science Group took a stake, its stock was below 4p. TP Group declined to comment. (Source: The Times)
17 Aug 21. TP Group PLC. Statement on Rejection of Indicative Proposal.
RNS Number: 8201I. TP Group plc(the “Company”, “TP Group” or the “Group”).
Statement on Rejection of Science Group plc’s Indicative Proposal
The Board of TP Group (“Board”), the provider of mission-critical solutions for a more secure world, notes the recent announcement on 16 August 2021 made by Science Group plc (“Science Group”) regarding its conditional indicative proposal in relation to the entire issued and to be issued ordinary shares of the Company. Whilst this announcement was silent as to price, the letter from Science Group received on 13 August 2021 referred to a conditional possible offer for the entire issued and to be issued ordinary shares of the Company at 5.8p per share, payable in cash (the “Proposal”).
The Board states its unanimous rejection of this Proposal and maintains its recommendation that its Shareholders take no action at this time for the following reasons:
- A price of 5.8p per share significantly undervalues TP Group.
- TP Group is well placed to create shareholder value as a standalone business.
- Cost reduction and new strategic plan already agreed and being implemented by the new CEO.
- No detail has been provided on the cash funding of the Proposal.
- The Proposal is opportunistic and seeks to capitalise on the short-term impact suffered by the Company as a result of the COVID-19 pandemic, from which it is already recovering.
Andrew McCree, Non-Executive Chairman of TP Group, said, “On behalf of the Board, I confirm that we have carefully considered and unanimously rejected Science Group’s approach which is opportunistic, conditional and unsolicited. The challenges that TP Group has faced over the last 18 months, alongside many other companies as the COVID-19 pandemic has continued, are well documented but are largely behind us. In David Lindsay, we have a new CEO leading the Company and a plan for growth. The approach by Science Group undervalues TP Group, and is an unwelcome distraction from implementing our growth plan.”
Since joining TP Group, David Lindsay has developed a strategic plan that will focus the Group on becoming a leading international consultancy underpinned by more focused leadership and a clearer direction. The Board fully supports the plan which will build upon TP Group’s strong position in the markets in which it operates and aims to deliver growth and enhanced shareholder value. The TP Group business model going forward will demonstrate increased focus on objectives, accountability and performance measurement and stronger divisional leadership coupled with cost savings across the Group. Changes on all these fronts are underway.
The Board believes that there are good growth opportunities for the Group in the highly regulated areas in which it already operates. In particular, there is growing demand from aviation, defence and space customers for systems that are dependable, autonomous and environmentally sustainable. TP Group’s consulting business (“TP Consulting”) has an enviable customer base including Babcock, BAE Systems, the MoD, AirBus and the European Space Agency. The Board believes that TP Consulting’s highly skilled staff are well placed to win additional high value contracts across the sectors in which they operate. Furthermore, TP Group owns several software applications that can potentially generate high margin revenue growth.
As was well documented, the Company received interest from parties seeking to acquire its Maritime division. Whilst the indicative offers did not meet the Board’s valuation requirements, the Group will consider any further interest in this division. Any future disposal proceeds could potentially be used to reduce bank debt, fund a special dividend to shareholders and provide growth capital to be invested in TP Consulting.
The Board believes that the refocused Group, led by its new CEO, together with its highly skilled and dedicated employees will take the next steps to establish a leading, high growth, high margin, cash generative international consultancy with a clear dividend policy.
Science Group
The Board will do all it can to ensure that any attempts to undermine the value or reputation of the Group will be strongly resisted in the best interests of its Shareholders and customers. The Board would like to draw Shareholders’ attention to the process leading up to the takeover by Science Group of Frontier Smart Technologies Group Limited.
The Board notes the comments expressed by Science Group in its RNS of 10 August 2021 relating to TP Group and also in its announcement of 16 August 2021, which made reference to a “qualification” in the Independent Auditor’s Report in the TP Group plc 2020 Annual Report. The Board would point out that this is incorrect and misleading and that TP Group received an unqualified Audit Opinion from its auditor on its 2020 Annual Report.
In addition, the Board has not been given any evidence that the Proposal can be funded from the existing resources of Science Group. Further, there is no detail in the announcement from Science Group of 16 August 2021 of what the “clear operational synergies” might be, nor has there been in any correspondence with the Board or its advisers. It is the view of the Board that these operational synergies do not exist, given that the markets and fields in which the two companies operate are fundamentally different.
On 16 August 2021 the Company received a requisition from Science Group under s303 of the Companies Act 2006 for the Board to convene a general meeting of the Company to propose resolutions to remove Andrew McCree and Jeremy Warner-Allen as directors and appoint to the Board in their place Martyn Ratcliffe and Peter Bertram, currently both directors of Science Group. The Board is required to convene a general meeting of the Company to consider these resolutions and further information will be provided to Shareholders in due course.
Conclusion
The Board reiterates its unanimous rejection of the Proposal, which significantly undervalues TP Group in its current composition taking account of identified cost savings. In addition, the Board believes that significant additional value can be created by deploying funds into the TP Consulting business. Accordingly, the Board concludes that an offer of 5.8p significantly undervalues the Group. Therefore, the Board has no intention of engaging with Science Group on the Proposal and has unanimously rejected it in order to focus on delivering its plan for TP Group and creating shareholder value.
As set out in the Company’s previous announcement, in accordance with Rule 2.6(a) of the Takeover Code, Science Group is required, by no later than 5.00 p.m. on 7 September 2021, to either announce a firm intention to make an offer for the Company in accordance with Rule 2.7 of the Takeover Code or announce that it does not intend to make an offer for the Company, in which case the announcement will be treated as a statement to which Rule 2.8 of the Takeover Code applies. This deadline can be extended with the consent of the Panel on Takeovers and Mergers in accordance with Rule 2.6(c) of the Takeover Code.
There can be no certainty either that an offer will be made nor as to the terms of any offer, if made. A further announcement will be made if and when appropriate.
This announcement has been made without the agreement or approval of Science Group plc.
Publication on website
In accordance with Rule 26.1 of the Code, a copy of this announcement will be available at www.tpgroupglobal.com, by no later than 12 noon (London time) on 18 August 2021.
The content of the website referred to above is not incorporated into and does not form part of this announcement.
Disclosure requirements of the Takeover Code
Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person’s interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person’s interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel’s website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel’s Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure. (Source: Investors Chronicle)
16 Aug 21. Peak oil for Goodwin. The company reckons it has gone past peak sales from the oil industry but is placing hopes on nuclear and radar products.
- Dividend increased to 102p from 82p
- Plans to invest in nuclear to offset reduced demand from oil industry
Engineering group Goodwin (GDWN) is going through a transition.
Its revenue last year dropped because of weakening demand from the oil industry for its valves and the decline in air travel hurt its radar systems business. It doesn’t expect the oil industry to ever return to its pre-pandemic trading levels. In fact, the group’s profits have yet to recapture highs set during the oil boom in 2014.
Fortunately, Goodwin is starting to benefit from efforts to diversify into nuclear waste, propulsion and naval hull products. Despite Covid-19, the order book at the end of April stood at £165m, which was down by a tenth on 2020 but about level with 2019.
Goodwin’s mechanical engineering business, which accounts for two-thirds of sales and 54 per cent of profits, bore the brunt of reduced oil & gas demand. Sales were down from £100m to £87m. Sales at the company’s other division, refractory products, were flat. The refractory business makes industrial linings that are resistant to extreme temperatures and recently launched an exciting new product into the resurgent jewelry market.
While revenue overall dropped 9 per cent, a reduction in cost of sales meant gross profit increased 12 per cent to £39m and operating profit rose by a third to £17m. The previous financial year had seen a jump in costs.
Customers’ capital expenditure slowed during the pandemic but Goodwin should now benefit from the economic recovery. The airline industry’s recovery in particular should aid a return to profitability for its radar business. In addition, the company now sells complete radar systems rather than just individual parts, which should boost margins.
The structural decline in oil is a concern. But diversification and product innovations are encouraging. Still, until there is more evidence of things coming good, we’re sticking with a hold rating. (Source: Investors Chronicle)
16 Aug 21. UK government must play defence on Ultra takeover. US-owned Cobham’s move to buy MoD tech supplier is test of Britain’s new security regime. The UK government is doing a lot of monitoring. Business secretary Kwasi Kwarteng has said he is “monitoring the situation” around supermarket Wm Morrison. When it comes to inhaler company Vectura, he asked officials to monitor it. Takeover interest for defence company Meggitt is being “closely” monitored. As is Ultra Electronics, which on Monday agreed a £2.6bn takeover by Cobham, the aerospace and defence group owned by US private equity firm Advent. What this actually means is anyone’s guess. These deals are being assessed under the old regime, with the tougher National Security and Investment Act rules (and retrospective powers) coming into force in January. Those were a response to rising intervention in deals internationally, as well as outcry over foreign, ill-fated takeovers of companies such as Cadbury and Arm. This latest bout of political speak, though, covers everything from, “of course we’re not going to intervene but we need to say we’re doing something” through to “this presents serious concerns and is going to get the full treatment”. If Ultra doesn’t qualify for the latter, then you wonder what the point of the government’s beefed-up rules on inward investment really was. Rarely has a deal been such an obvious candidate to be reviewed, restricted and potentially blocked. Ultra provides crucial technology to the Ministry of Defence, from sonar-enabled buoys for the detection of submarines to control panels for the UK’s nuclear deterrent fleet. The UK may not be Ultra’s biggest customer; 60 per cent of sales are in the US. But a third of assets and capital investment at present are here. The UK government isn’t just a big customer, it may well have helped fund the development of this technology. And there is good reason to keep it within the MoD’s sphere of influence: UK defence groups including Ultra were called upon to produce bespoke technology at speed for the conflicts in Afghanistan and Iraq, says Nick Cunningham, analyst at Agency Partners. Yes, the US is an ally. But it is also proprietorial about US-based defence technologies. That arguably limits the benefits from common ownership of US and UK-based businesses in this sector in any case. You can’t really blame Ultra’s board for acquiescing to a deal at a record price, which values the company at more than 17 times this year’s ebitda compared with the 13 times that Advent paid for Cobham in 2019. The need to take into account stakeholders beyond investors is rather different when the key one, who should share concerns about keeping jobs and skills in this country, has an effective right of veto. And the government should be sceptical. Advent sold half of Cobham, measured by the value of the businesses, within 18 months of the deal. The company may claim a better strategic fit between Ultra’s units and what remains of Cobham. But a financial investor will always be looking for ways to take money off the table and, ultimately, for their exit. The fact that Advent has stood by the commitments made when it bought Cobham only shows that they were inadequate to begin with. The starting point on Ultra doesn’t look much better. The vague areas for discussion with the government lacked timeframes, figures or a commitment not to flip assets on. According to people familiar with the matter, Advent and Cobham haven’t engaged with the business department’s screening unit, which is operating ahead of the new regime in January and intended to enable early co-operation. In any case, its woolly jumping-off point for government talks already compares unfavourably with US strategic buyer Parker Hannifin’s for Meggitt. One thing seems pretty clear. The fears that strengthened government oversight would have a “chilling effect” on dealmaking were unfounded, given the frenzy of bids for UK companies. A dose of political uncertainty is apparently no match for the cheaper valuations offered by the UK market, and cheap funding offered by just about everyone. Perhaps buyers have looked at a government and business secretary whose instincts tend towards the laissez-faire when it comes to foreign investment and concluded that it’s business as usual. If ever there was going to be one, Ultra is the case to prove them wrong. (Source: FT.com)
16 Aug 21. COMSovereign Reports Second Quarter 2021 Financial Results.
Sequential Quarterly Revenue Growth Reflects Early Production Capacity Increases and Initial Contributions from Sky Sapience. COMSovereign Holding Corp. (NASDAQ: COMS) (“COMSovereign” or the “Company”), a U.S.-based developer of 4G LTE Advanced and 5G Communication Systems and Solutions, today reported financial results for the second quarter ended June 30, 2021.
- For the three months ended June 30, 2021, total revenues were approximately $3,611,000 compared to approximately $ 3,010,000 for the three months ended June 30, 2020, driven largely by sales at the Company’s DragonWave, Drone Aviation, and Sovereign Plastics business units. Sequentially, quarterly revenues in the second quarter of 2021 increased over 73% versus revenue for the first quarter of 2021. This sequential increase reflects contributions from Sky Sapience which was acquired in February 2021 as well as production increases which occurred late in the second quarter as a result of capital investments made into production and inventory with funds secured by the Company at the end of the first quarter of 2021.
- Revenue growth in the second quarter of 2021 was impacted by the global shortage of key components and tight supply chain conditions, especially related to DragonWave radio production. The Company recently resolved many of the issues related to production and testing of Fastback Intelligent Backhaul Radios (“IBRs”) which delayed shipment to customers during the second quarter. As announced today, volume production of Fastback Radio kits has now resumed, enabling initial fulfillment against $8.7m in open orders with a tier one network operator. Revenue from these open orders is expected be reflected in the 3rd and 4th quarter financial results.
- Gross profit for the three months ended June 30, 2021 was approximately $1,798,000, representing a gross margin of 50%, an improvement from a gross profit of approximately $1,457,000 and a gross margin of 48% reported for the three months ended June 30, 2020.
- For the three months ended June 30, 2021, total operating expenses increased to approximately $12,182,000, compared to approximately $7,588,000 for the three months ended June 30, 2020, due to the expanded size of the business, increases in professional services including accounting and legal, and staffing levels across the organization.
- As of June 30, 2021, the Company ended the quarter with approximately $4.9m in cash and approximately $7.1m invested in inventory and pre-planned production which will be utilized for current production needs for the remainder of 2021.
- Investors can view the complete 10-Q filing at www.sec.gov or on the Company’s website at https://investors.comsovereign.com/SEC-Filings
“During the second quarter, our team made steady progress implementing our focused strategic plan highlighted by significant investments in inventory, production capacity at our contract manufacturer partners and the continued buildout of our Tucson facility. The deployment of growth capital secured at the end of the first quarter and deployed into our business during the second quarter is just now beginning to contribute to our operations,” said Dan Hodges, Chairman and CEO of COMSovereign Holding Corp. “As evidenced in our announcement this morning, our investments into production have enabled us to resume volume manufacturing of our Fastback Intelligent Backhaul Radios which we are now fulfilling an order of $8.7m for a Tier 1 customer over the remainder of the year. Based upon rapidly increasing production capacity, and the availability of necessary components, the Company expects the ability to meet Fastback radio order volumes of approximately $40m from customers over the next 8 to 10 months.”
Second Quarter Business Highlights:
- During the second quarter, our aerial platform business, consisting of Sky Sapience and Drone Aviation, were each busy supporting existing customers, both domestically and internationally. Both operations were also gearing up production activities on new products and working with new partners in response to several new contracting opportunities. Based upon current activities and inquires, the Company believes there will be new contracts being executed before the end of the calendar year.
- VNC continues to be active with partners and customers across every sector of its business including Commercial, Federal/Defense and Academia. This effort was highlighted in a 5G Cooperative Research and Development Agreement (“CRADA”) with the National Institute of Standards and Technology (“NIST”) and VNC’s participation in the National Guard Patriot Exercise (PATRIOT 21) technology demonstration event with its partner, Hughes held in June.
- The newly acquired Innovation Digital unit continues to partner with several major U.S. government prime contractors on its advanced radio waveforms. These technologies are instrumental in the creation of next-generation wireless technologies including software-defined radio systems for military and commercial markets. Innovation Digital was also granted its 18th U.S. patent.
- RVision’s Patrol CCTV product was selected by a defense contractor for a sole sourced contract as part of a system that will be installed on vehicles being designed for foreign military sales. The defense contractor is looking to expand the program for an unnamed country and has already engaged with other customers.
- Sovereign Plastics continues to benefit from onshoring efforts as manufacturers looking to reduce supply chain dependency on overseas providers and recorded outside sales in excess of $1.2m during the quarter and achieved profitably.
Hodges concluded, “Although there are headwinds created by chip shortages and longer-than-ideal supply chains for select components, the potential ahead of COMSovereign remains large, driven by demand for our 4G LTE and 5G technologies which can play a critical role in the modernization of today’s public and private wireless networks. Furthermore, the strategic importance of ‘Made in America’ is taking on new urgency thanks to new spending proposals for infrastructure, rural access and federal purchasing and we believe we are well positioned to capture a portion of this trillion-dollar+ opportunity. With our unique radio hardware and software solution portfolio including tethered drones, Lextrum’s in-band full duplex and the pending addition of SAGUNA’s Multi-access Edge Cloud (MEC) technologies and working alongside a growing list of partners and universities, we see an even greater opportunity for COMSovereign in the ongoing communications revolution.” (Source: PR Newswire)
17 Aug 21. EWS Ltd. are incorporating in Australia with the launch of EWS (Asia Pacific). Led by an Australian Managing Director who will take up their post from 1 September 2021, the Canberra based EWS (AP) team will be supporting the whole of government, defence, intelligence and security clients in Australia, New Zealand and across Asia Pacific, bringing specialist skills to help build regional capability. EWS is a global innovation consultancy operating in the multi-domain arena, providing clients with practical solutions to solve complex and overwhelming problems.
Commenting on the expansion, Jon Gower, EWS’ CEO said, “Our specialist teams have been providing vendor-neutral consultancy, intelligence and training support to governments, defence and security teams dealing with global threats, counter terrorism and near-peer conflict since 2009 Incorporating in Australia is a natural step forward for us, providing the Group with a strong foundation to develop a team of specialists, centred on Australia, with reach across the whole Asia Pacific region.”
On hearing the news of the launch, Jono Beesley, DSM brigadier (Retired) said, “As the former Commander of the ADF Joint Counter Improvised Threat Task Force where EWS’ products provided critical Open Source Threat Intelligence, I saw first-hand the game changing operational benefits EWS delivered to operational planning and threat mitigation. The establishment of EWS (AP) is a significant addition to our sovereign intelligence capability.”
Jon Gower finished, “We think it’s vital for the future of citizens and communities across Asia Pacific that we help to build a sovereign capability that is proactive rather than reactive, using all available intelligence to guide decision making and create an adaptive approach for tomorrow’s threats, not yesterday’s. The EWS Group is very proud as we launch into Australia and look forward to building collaborative and mutually beneficial relationships within the defence, intelligence and security communities.”
Despite a global pandemic, EWS Ltd. has experienced phenomenal growth and demand from governments, defence, national and domestic security, justice and corporate entities across the globe, which has led it to this natural decision to launch EWS (AP) in Australia to better service the specific needs of the Asia Pacific region.
Whether you are a government; operating in the defence sector; a global organisation; working in national and domestic security; or a commercial business, you can rely on EWS (AP) to provide you with unbiased and honest advice. Unique in our approach and application, we will deliver proactive support, unique insights and recommendations to improve operations and meet your budgets and deadlines.
16 Aug 21. Boeing, Raytheon and other defence contractors slide amid US retreat from Afghanistan. Northrop Grumman, General Dynamics and Lockheed Martin stock all went into the red on Monday morning on Wall Street
Shares in several of the world’s largest defence contractors sank on Monday as the chaotic withdrawal of US and NATO forces from Afghanistan led investors to reassess their commitments to beneficiaries of America’s military-industrial complex.
In early trading on Wall Street, Lockheed Martin Corp was down 0.3% at US$356.83, while Raytheon Technologies Corp dropped 1.5% to US$85.97 and Northrop Grumman Corp dipped 0.8% to US$360.34.
Other firms with large defence operations were also on the decline, with Boeing Co sinking 2.6% to US$228.30 while General Dynamics Corp slipped 0.3% to US$197.72. Over in the UK, London-listed defence firm BAE Systems PLC was down
The contraction on the markets for the world’s largest defence firms followed the rapid collapse of the US-supported Afghan government over the weekend, with forces of the Islamist Taliban insurgency entering the capital Kabul on Sunday.
The rapid Taliban advance sparked a rush by American and other foreign diplomats and civilians to hastily exit the country, with many commentators comparing the incident to a similarly rapid exit from the Vietnamese capital of Saigon in the 1970s.
With the Taliban now effectively in control, defence contractors are likely to face a US administration much more averse to expensive foreign interventions, in addition to the now-defunct Afghan army which was supplied with around US$88bn in US weapons and training. (Source: proactiveinvestors.co.uk)
16 Aug 21. London’s defence sector to become a little less British as Meggitt, Ultra Electronics agree to international takeovers. The UK government has been called for intervention but it hasn’t taken action yet. London’s defence sector is set to become a little less British as two major names are about to succumb to international takeovers. Meggitt PLC has recommended a £6.3bn offer from US peer Parker-Hannifin Corp, although TransDigm Group Inc has proposed £7bn, while Ultra Electronics Holdings PLC has agreed on a £2.5bn deal from Cobham PLC.
Although based in England, Cobham is owned by US private equity firm Advent International. The acquisition sparked controversy but went ahead with promises of tight scrutiny. A year and a half after completion, Advent has sold over half of the assets it bought originally.
Meanwhile, Babcock International Group PLC will offload its subsidiary Frazer-Nash Consultancy to KBR for £293mln as part of a disposal programme. It was acquired by Babcock in 2007, although it has mostly operated independently from it.
“The downside for UK investors is yet another part of the market is being hollowed out, reducing the breadth and diversity on offer from London-listed shares,” said AJ Bell investment director Russ Mould.
UK business secretary Kwasi Kwarteng has been called for intervention and is said to be “actively interested” in both takeovers, although no action has been taken yet, the FT reported.
Under the Enterprise Act 2002, the business secretary can stop mergers and acquisitions that could affect national security, financial stability and media plurality. However, a formal national security review could take months.
Meanwhile, Meggitt’s chairman Nigel Rudd told The Times ministers should be ready to intervene if bidders don’t commit to protect jobs and investments in the UK.
“The government could intervene,” he said. “It’s the government’s job to look after national interests. I’ve always believed that. It’s more difficult for the chairman of a public company to do that, because we have a fiduciary duty.”
He noted that “clearly, price is important” but the new owner should keep the headquarters in Coventry and keep research and development spending.
Similarly, Cobham is due to sign legally binding contracts that Ultra will continue serving the UK government for national security contracts, protecting jobs and increasing investment in innovation.
Looking at the rest of the defence sector, the government has golden shares in BAE Systems PLC and Rolls-Royce Holdings PLC, plus some of Babcock International’s dockyard assets.
It means that any foreign takeover proposal could be blocked as a golden share gives veto powers.
Last week, the Defence Select Committee said UK government should own a ‘golden share’ in all defence groups critical to UK national security to stop them being taken over by overseas rivals. (Source: proactiveinvestors.co.uk)
15 Aug 21. NavSight Holdings Shareholders Approve Business Combo With Spire Global. A Form 8-K disclosing the full voting results is expected to be filed with the Securities and Exchange Commission.
The closing of the Business Combination is anticipated to occur on August 16, 2021. Following closing, the combined company will be known as Spire Global, Inc. and is expected to trade on the New York Stock Exchange under the new ticker symbol “SPIR.”
The previously announced Business Combination is expected to provide approximately $265m in cash proceeds to Spire through the merger, inclusive of a $245m PIPE.
Spire is a global provider of space-based data, analytics, and space services, offering access to unique datasets and powerful insights about Earth from the ultimate vantage point so that organizations can make decisions with confidence, accuracy, and speed.
Spire uses one of the world’s largest, multi-purpose, satellite constellations to source hard to acquire, valuable data and enriches it with predictive solutions. Spire then provides this data as a subscription to organizations around the world so they can improve business operations, decrease their environmental footprint, deploy resources for growth and competitive advantage, and mitigate risk.
According to Spire, the firm gives commercial and government organizations the competitive advantage they seek to innovate and solve some of the world’s toughest problems with insights from space. Spire has offices in San Francisco, Boulder, Washington DC, Glasgow, Luxembourg, and Singapore.
NavSight (NYSE: NSH) is a newly organized, blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. (Source: Satnews)
15 Aug 21. Multi-M$$ Deal Signed Between Mynaric + SpaceLink. Mynaric expects to ship SpaceLink’s first units during the first quarter of 2023. The deal includes mutually agreed upon milestone payments leading up to initial delivery.
The agreement follows the framework previously announced that also includes potential follow-up orders and further collaboration between the two companies. In addition to this announcement, Mynaric is expected to provide SpaceLink LEO optical communication terminals (OCT) for SpaceLink customers. These terminals would interface with the SpaceLink MEO data relay service. Both agreements significantly strengthen the relationship between the two aerospace organizations to mutual benefit.
“The final details of this agreement are just the beginning of a strategic partnership designed to bring fast, highly secure and continuous communications between spacecraft and the ground. Our industrialized approach to production will allow us to meet the expanded needs as SpaceLink’s constellation grows,” said Tina Ghataore, president, Mynaric USA and Chief Commercial Officer, Mynaric.
SpaceLink is building an information superhighway for the space economy that will help advance humanity to a new age of space commerce, exploration, environmental awareness, and security. The Always in Sight™ data relay system provides global coverage to empower space system operators to maximize use of their assets. SpaceLink Corporation is headquartered in the Washington DC area and has offices in Silicon Valley, California and is a wholly owned subsidiary of Electro Optic Systems Holdings Limited, a public company traded on the Australian stock exchange.
Mynaric (M0Y, ISIN: DE000A0JCY11) produces the optical fiber for the skies and, as a pioneer of laser communication, enables extremely fast and secure wireless data transmission between aircraft, drones and satellites. Globally, the need for fast and ubiquitous network connectivity is advancing inexorably. Data networks such as the internet are now largely based on infrastructure on the ground which cannot be expanded arbitrarily for legal, economic or logistical reasons. The future, therefore, calls for an expansion of the existing network infrastructure into air and space. Mynaric provides laser communication products to establish the necessary data highways for telecommunication constellations in air and space. (Source: Satnews)
16 Aug 21. Cobham agrees to buy rival UK defence group Ultra Electronics for £2.6bn. Deal likely to add to concerns about the hollowing-out of UK listed defence sector and loss of control over sensitive IP. Ultra Electronics, the aerospace and defence group, is set to become the latest UK engineering specialist to fall into foreign ownership after backing a £2.6bn takeover from Cobham, its US private equity-owned rival. Ultra’s board formally backed the takeover after Cobham’s owner, the buyout group Advent International, promised to safeguard UK jobs and protect national security in an attempt to allay concerns about the deal. Ultra provides critical technology to the UK government, including submarine-hunting and sonar equipment for the Royal Navy, control systems for the UK’s fleet of Trident nuclear missile submarines and components for F-35 fighter jets. Under the terms of the deal, Ultra shareholders will receive £35 a share as well as an interim cash dividend of 16.2p due next month, valuing the company at £2.57bn. Shares in Ultra rose close to 5 per cent in afternoon trading in London on Monday to £33.16. Although agreed by both companies, the deal has fuelled fears over the hollowing-out of Britain’s listed defence sector, as well as the loss of UK control over sensitive intellectual property that is critical to national security. Cobham said on Monday that it would offer “legally binding and enforceable commitments” on Ultra, including “appropriate protections for sovereign UK capability, continuity of supply and critical capabilities in the UK”. Shonnel Malani, chair of the Cobham group and a partner at Advent, told the Financial Times that the details of its commitments to Ultra were still to be agreed with the government. “We have not tried to pre-empt the government on the terms. We will do whatever the government deems appropriate,” he said. Despite the assurances, however, concerns remain. Kevan Jones, Labour MP for North Durham and a member of the House of Commons defence select committee, said he would write to the prime minister to urge the government to intervene on national security grounds. “Ultra leads the world in deployable water sensors, torpedo defence systems and electronic warfare technology, all of which are deeply tied to our nuclear deterrent and our defence against underwater threats. If the government does not intervene in this case on national security grounds, I cannot see where it would ever intervene,” he told the FT. Nick Cunningham, an analyst at Agency Partners, said Ultra “plays a disproportionately big role in Britain’s sovereign defence capabilities compared with the size of the company”. “This is really a policy decision. Ultra is extremely close to the Ministry of Defence. The de facto loss of control by the UK government would be very worrying,” he said. The government has until now said only that it is monitoring the situation, although UK business secretary Kwasi Kwarteng is said to be “actively interested” in the transaction. Under the Enterprise Act 2002, the business secretary can intervene in mergers and takeovers on grounds of national security, financial stability and media plurality. A broader set of national security and investment rules comes into force in January 2022. Advent’s acquisition of Cobham last year sparked a political outcry. The government eventually agreed that the deal could happen with official promises of tight scrutiny. Within 18 months of taking control, Advent had sold more than half the assets it bought by value. Malani said the company had “pretty sincere and straightforward intentions” on Ultra. “We are looking to do a strategic deal. Our job is to make sure the company is more valuable whenever we go on to sell it versus when we bought it. That is not at odds with doing all the right things in relation to jobs and national security commitments,” he said. Tony Rice, Ultra’s chair, said the company was “comfortable that [Advent’s] stakeholder commitments plus legally binding undertakings” to the government “will protect stakeholder interests”. (Source: FT.com)
16 Aug 21. Ultra promises to maintain UK presence after Cobham’s formal offer. Advent-owned Cobham will keep headquarters in the UK and maintain staffing levels, the companies said
- Offer maintained at £35 a share plus the interim dividend
- Promises to government include protecting local manufacturing and “sovereign UK capability”
IC TIP:Await documents at 3,316p
Cobham has stuck with its £35-a-share offer for defence company Ultra Electronics (ULE), plus payment of the 16.2p per share interim dividend announced last month. Ultra’s board said Cobham would commit to “protecting existing and creating new UK manufacturing and engineering jobs”, and keep a UK headquarters.
The concrete offer is an improvement on the initial £28-a-share-bid in June from Cobham, the former London-listed defence company now owned by private equity firm Advent International.
The company’s share price was up 5 per cent in early trading, to 3,310p. It has traded below the £35 level since the higher offer was announced last month.
Cobham brought out director and former US Secretary of Defence Mark Esper, who served for just over a year under Donald Trump, to sell shareholders and the UK government on the deal. “It is essential that we have defence companies capable of meeting [US and UK] joint security needs,” he said. “The enhanced capabilities of a combined Cobham and Ultra promise to deliver significant benefits to both countries.”
Ultra chairman Tony Rice said the “ very significant premium” to his company’s pre-offer share price should encourage shareholders to support it. The board needs 75 per cent support for the deal at a shareholder meeting for the takeover to go ahead. The date for the meeting has not yet been set.
There is a risk the promises by Cobham won’t go far enough to get the government onside, but the share price trading close to 3,500p shows there is plenty of confidence on this one. Shift from our previous buy rating to await documents, as the formal offer has arrived. Last IC View: Buy, 2,166p, 28 Jun 2021. (Source: Investors Chronicle)
11 Aug 21. TP Group plc, (the “Company”, “TP Group” or the “Group”), Response to speculation. TP Group notes recent speculation and announces that it has received an approach from Science Group plc (“Science Group”) regarding a possible offer for the entire issued and to be issued ordinary shares of the Company (save for those already owned by Science Group).
The approach is preliminary in nature and there can be no certainty that any offer for TP Group will be made, nor as to the terms on which any such offer might be made. Shareholders are urged to take no action at this time.
In accordance with Rule 2.6(a) of the Code, Science Group must, by no later than 5.00 p.m. on 7 September 2021, either announce a firm intention to make an offer for TP Group in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline may be extended with the consent of the Panel in accordance with Rule 2.6(c) of the Code.
A further announcement will be made if and when appropriate.
13 Aug 21. Embraer returns to profit, unveils new turboprop plans. Brazilian planemaker Embraer SA (EMBR3.SA) posted its first quarterly recurring profit in more than three years on Friday and took another step toward the development of the first brand-new Western turboprop aircraft in decades.
Turboprops are said to be more efficient on shorter trips and are particularly attractive at a time of higher oil prices.
Embraer’s new concept for the turboprop would feature engines mounted at the rear of the aircraft, an unusual change from the more conventional wing-mounted engines, the company’s chief commercial officer, Arjan Meijer, said on Twitter.
The company has been searching for a partner to develop a new turboprop that would compete with European manufacturer ATR, which dominates the market with a long-established model of roughly 50 to 70 seats.
Embraer had previously sought to develop its turboprop under a partnership with Boeing (BA.N) that fell through early in the coronavirus pandemic.
Meijer did not say who would supply the aircraft’s engines. Pratt and Whitney (RTX.N) currently supplies all turboprop engines, but GE Aviation (GE.N) is developing a competing model.
Embraer reported second-quarter net income of 212.8m reais ($40.5m), its first recurring profit since the first quarter of 2018, driven by a partial recovery in travel.
A year earlier it posted a loss of 1.071 bn reais and was scrambling to restructure operations to contend with the pandemic and the failed $4 bn deal with Boeing Co (BA.N).
The second quarter of last year was particularly brutal for planemakers, and the vast majority of Embraer’s commercial aircraft revenue vanished as airlines deferred orders.
But on Friday Embraer suggested it may be turning the page.
Chief Financial Officer Antonio Carlos Garcia said on a call with analysts that Embraer is poised to post a stronger performance next year, and he is “very optimistic” about finding a partner for the turboprop.
Embraer, which had suspended guidance for its operations when the pandemic began, said it sees commercial deliveries at between 45 and 50 planes and executive aviation deliveries at 90 to 95.
Revenue, which more than doubled in the second quarter to $5.922bn, is likely to be between $4bn and $4.5bn, with an adjusted EBITDA margin of 8.5% to 9.5%. Free cash flow should be at breakeven, with a cash burn of up to $150m seen this year. ($1 = 5.2536 reais) (Source: Reuters)
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TCI International, Inc., is a wholly-owned subsidiary of SPX Corporation. TCI provides turn-key solutions for spectrum management and monitoring, direction finding, geolocation and communications intelligence to civilian, government, military and intelligence agencies as well as antennas for communications and high-power radio broadcasting. TCI is headquartered in Fremont, California, USA. For more information, visit www.tcibr.com.
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