Takeover Bids

US private equity group Advent buys UK's Cobham for $5 billion

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Key Points
  • Shares in Cobham, whose technology is found on F-35 fighters and Airbus jets, jumped 35% in early deals to 165.95 pence.
  • Cobham, which also makes electronic warfare systems and communications for military vehicles, was shaken by a string of profit warnings in 2016 and 2017, forcing it to raise cash from shareholders.
  • Chief Executive David Lockwood embarked on a turnaround strategy two and half years ago, focused on improving the company's financial and operating performance.
An attendee interacts with a worker dressed in blue at the Cobham Plc chalet on day two of the Farnborough International Airshow (FIA) 2018 in Farnborough, U.K., on Tuesday, July 17, 2018.
Mary Turner | Bloomberg | Getty Images

U.S. private equity group Advent International has agreed to buy defense and aerospace group Cobham for 4 billion pounds ($5 billion), the British company known for pioneering air-to-air refueling technology said on Thursday.

The offer of 165 pence in cash for each Cobham share represents a 50.3% premium to the average share price over the last three months, Cobham said.

Shares in Cobham, whose technology is found on F-35 fighters and Airbus jets, jumped 35% in early deals to 165.95 pence.

Cobham, which also makes electronic warfare systems and communications for military vehicles, was shaken by a string of profit warnings in 2016 and 2017, forcing it to raise cash from shareholders.

Chief Executive David Lockwood embarked on a turnaround strategy two and half years ago, focused on improving the company's financial and operating performance.

"This offer reflects the potential for future growth and improving performance, and is an endorsement of our turnaround strategy and our hard working people," he said.

Lockwood's plan was hampered by problems with Boeing's troubled KC-46 aerial refueling program, but it said on Thursday its free cash flow was better than expected after a 48.7 million pound settlement of the issue.

It announced organic revenue growth of 11% to 1.03 billion pounds and a 12% rise in underlying operating profit to 107.1 million pounds in the half year to June 30.

It also said it had started a strategic review of its aviation services business in Australia.