Cobham, the publicly listed UK-based aviation equipment, electronics and services business, is to be taken over private by a US private equity group in a cash deal pegging its value at approximately £4 billion ($5 billion).
Advent International subsidiary Bidco will pay 165p per share, more than a third above Cobham’s closing price on 24 July, the day before the deal was announced. Cobham’s board has recommended the offer to shareholders and will hold a general meeting mid-September.
First-half results released this morning show revenue up by 30% to £1.03 billion, including organic revenue growth of 11%. Operating profit slumped to £63.7 million, from £213.9 million in the period a year ago. Net debt was reduced by nearly £50 million, to £148.3 million, pre-tax profit of £60.5 million was just under a third of its level a year earlier.
The sale to Advent follows a period of several years which has seen a diversifying Cobham take on a heavy debt load and issue several profit warnings. Chief executive David Lockwood describes first-half performance of the mission systems and communications and connectivity businesses as “strong”, noting: “We have continued to make good progress to improve operational performance and to significantly reduce the group’s risk profile.”
In March, Cobham agreed to pay Boeing $63 million to settle redesign issues regarding the aerial refuelling boom it supplies for the US Air Force’s (USAF's) KC-46A tanker.
And in May, Cobham settled, for £70 million, a long-running dispute with the UK government over tax and interest deductions; the group continues to face EU investigations over state aid which could see it forced to pay some tens of millions of pounds in extra taxes.
But May also saw Cobham selected by Boeing to supply the complete oxygen system for the USAF's future T-X trainer.