LONDON, UK: Cobham Ultra Acquisitions Limited, a wholly-owned indirect subsidiary of Cobham Group Holdings Limited, has agreed the terms and conditions of a recommended acquisition of Ultra Electronics Holdings plc in a £2.57 billion transaction.
The boards of directors of Ultra Electronics Holdings plc and Cobham Ultra Acquisitions Limited have reached agreement on the terms and conditions of a recommended all cash acquisition of the entire issued, and to be issued, ordinary share capital of Ultra.
Under the terms of the Acquisition, each Ultra Shareholder will be entitled to receive £35.00 in cash for each Ultra share.
In addition, Ultra Shareholders will be entitled to receive, without any consequential reduction in the Consideration, the interim cash dividend of 16.2 pence per Ultra Share as announced by Ultra on 19 July 2021, which is due to be paid by Ultra on 17 September 2021 to those Ultra Shareholders who appear on the register of members of Ultra as at 27 August 2021.
The price of £35 per Ultra Share, together with the Interim Dividend, values Ultra’s entire issued, and to be issued, ordinary share capital at approximately £2.57 billion on a fully diluted basis.
Cobham and Ultra both have a history as innovators and share advanced complementary capabilities, delivering mission critical solutions to the US, UK and other key allies.
Cobham considers that customers will benefit significantly from the combination, driven by the complementary design, engineering and manufacturing capabilities of the two groups, which will enable the delivery of more integrated and higher performance solutions to our mutual customers and wider stakeholders, including across the “five-eyes” nations.
Cobham sees strong industrial logic for a combination with Ultra, which will facilitate accelerated revenue growth in both businesses, expansion on current shared platforms and programmes and wins on combined enhanced positions on platforms and programmes of the future.
Cobham is a wholly-owned indirect subsidiary of Cobham Group Holdings. The Cobham Group is a leading global technology and services innovator offering a suite of products, systems and engineering services that continue to enable innovative and cutting-edge solutions in space, avionics and electronics, in both commercial and defence markets.
Commenting on this Announcement, Shonnel Malani, Chairman of the Cobham Group, said: “We believe Cobham and Ultra’s complementary capabilities delivering mission critical technology will be significantly enhanced through the combination of the two groups, enabling the development of higher performance solutions for our customers.
“We recognise the important role that a combined Cobham and Ultra will play in ‘five-eyes’ defence and are committed to protecting the continuity of supply to the UK and our allies. We look forward to working with HM Government, and other relevant stakeholders, to agree legally binding commitments which safeguard Ultra’s contribution to the UK economy and national security.”
Mark T. Esper, Former US Secretary of Defense and non-executive director of Cobham AES, said: “As a former US Secretary of Defense, I have seen first-hand the enduring importance of a close military relationship between the UK and the US. I am also aware of the evolving threats our two nations, and our allies, face. As such, it is essential that we have defence companies capable of meeting our joint security needs. The enhanced capabilities of a combined Cobham and Ultra promise to deliver significant benefits to both countries.”
Martin Clements, Former Director General of the UK Foreign & Commonwealth Office and non-executive director of Cobham Limited, said: “During my 30 years at the Foreign and Commonwealth Office, I was able to see first-hand the critical role both technology and international co-operation play in meeting the UK’s security and defence needs. The increased scale and international footprint of a combined Cobham and Ultra will further strengthen the company’s ability to address the national security requirements of the UK and its allies.”
Tony Rice, Chairman of Ultra, said: “The Ultra Board is confident of Ultra’s future prospects as an independent listed company and its ability to deliver excellent and sustainable value for all its stakeholders. The Ultra Board is also extremely pleased with the excellent progress that the management team is making on executing the ONE Ultra strategy and the Focus; Fix; Grow transformation programme. This was clearly recognised and part of the rationale behind Cobham’s interest in Ultra and enabled the Ultra Board to review Cobham’s unsolicited approaches from a position of strength.
“In considering Cobham’s various approaches, the Ultra Board reviewed the Ultra Group’s strategic plans and financial projections in detail, as well as comparative trading and transaction multiples. The Ultra Board recognises the very significant premium to Ultra’s undisturbed share price and to its all-time high share price.
The offer price compares favourably to the current value of Ultra’s risk adjusted future financial performance and also recognises the remarkable value creation that has taken place under current management. The Ultra Board has also spent considerable time reviewing the potential impact of Cobham’s ownership on Ultra’s stakeholders and is comfortable that their stakeholder commitments plus legally binding undertakings to HM Government will protect stakeholder interests appropriately. The Ultra Board therefore unanimously intends to recommend the Cobham offer to shareholders.”
Simon Pryce, Chief Executive Officer of Ultra, said: “Today’s offer from Cobham reflects the significant progress and value that has been created by the whole Ultra team from our ONE Ultra strategy and from the progress we are making on our Focus; Fix; Grow transformation. The team should be very proud of what they have achieved so far.
“This combination will enhance Ultra’s prospects through Cobham’s stated intentions to accelerate our transformation, invest in our technology, and to continue to support our customers, operations, communities, and most importantly our talented and committed people.
“The combination will also create a defence electronics business of greater scale, bringing together two businesses with complementary technology, design, engineering and manufacturing capabilities, which we believe will enable the delivery of a broader range of integrated, cost competitive and high performance solutions across a wider range of platforms, benefitting our mutual customers and wider stakeholders.”