The sale of a British plane-parts maker to a Chinese-owned rival was called off after a government intervention over national security.
Better Capital, the private equity firm which owns Northern Aerospace, said it cancelled the sale to Chinese-owned Gardner Aerospace because it had not received the green light from the Competition and Markets Authority (CMA) by the deal’s deadline.
Northern Aerospace makes a number of specialist plane parts for Airbus, Boeing and Bombardier.
Security fears: Better Capital, the private equity firm which owns Northern Aerospace, said it cancelled the sale to Chinese-owned Gardner Aerospace
Jon Moulton, the founder of Better Capital, said the business would now have to undertake ‘significant changes’ in order to stay afloat, as major customer Airbus plans to end its dealings with Durham-based Northern Aerospace by the end of December.
Moulton did not rule out that these changes could involve cuts to the Consett-headquartered company’s 400-strong workforce.
He said the focus would be on investing in machinery to help reduce costs.
He added that the business would need to ‘secure investment’ to help drive these changes, but that looking for a new buyer for Northern Aerospace immediately would ‘achieve very little’.
The CMA initially announced it was intervening in the sale of Northern Aerospace to Gardner in June, just days before the deal was due to complete.
It was acting on an intervention notice on national security grounds from Business Secretary Greg Clark, who was himself influenced by Defence Secretary Gavin Williamson.
But Moulton said there were ‘compelling commercial reasons’ which meant the deal needed to be done quickly.
He said that if the CMA had not given its blessing by July 7 he would call the sale off.
He said yesterday: ‘It’s a dead bat, in cricketing terms. The CMA has not told us anything, and I’ve never seen anything like it.
‘It’s very strange. We have utterly negligible military activities, and we have never had any contact with the Ministry of Defence.’
The CMA had given itself until July 13 to submit its report to Clark. Though the sale has now been called off, it said it would continue to compile the report.
A government spokesman said: ‘As Northern Aerospace carries out a range of aerospace work, and to ensure that UK national security interests are protected, the Defence Secretary has requested further analysis on the proposed deal.’
Sources close to the deal have suggested that Northern Aerospace may have been confused with another business which shared its former name, CAV Aerospace.
The MoD and the CMA declined to comment. Earlier this year, national security concerns almost halted the sale of British engineer GKN to private equity bidder Melrose Industries.
Williamson was worried that GKN, which makes parts for military aircraft, could be broken up by Melrose and sold to foreign bidders to rake in more cash for investors.
A number of MPs also condemned the sale to Melrose on the grounds that the firm would likely cut swathes of jobs to shrink costs.
The pressure forced Melrose to make a number of promises, which included keeping GKN’s headquarters in the UK and to maintain spending on research and development.