One of the defence firm Cobham’s major investors has criticised its planned takeover by US private equity group Advent.
Sanderson Asset Management said it was ‘inclined to vote against’ Advent’s £4bn offer at a shareholder meeting to be held on 16 September. Advent will need the support of 75% of votes cast at the meeting for the takeover to go through.
So far, Advent’s offer has the support of Cobham’s management and Artemis Investment Management, which adds up to 5.2% of the company’s holdings.
Sanderson senior portfolio manager says: “We have privately communicated our position to the board along with our desire to see the management team continue their good work in the event a better offer does not materialise.”’ It is the first time one of Cobham’s institutional shareholders has said it could oppose the deal.
Sanderson owns around 2.4% of shares, making it the 11th largest shareholder.
Added together with the 1.5% of shares owned by the Cobham family, around four per cent of shares could be cast against the offer next week.
Hedge funds including AQR Capital, Melqart Asset Management and Moni Partners are believed to have taken an around five per cent stake in Cobham. Their presence as short-term investors is thought by analysts to indicate that the deal is likely to go ahead.
Silchester International Investors, until recently the largest shareholder, has urged the board to seek a better offer than Advent’s 165p-a-share bid. But it has stopped short of saying which way it will vote.
The Sanderson comments came in a letter to Lady Cobham who has written to the firm’s 15 largest shareholders urging them to vote against the deal. Lady Cobham said that the offer was too low and that Advent would reap the benefits of the company’s turnaround after a slew of profit warnings rocked the firm between 2015 and 2017.
Paaskesen said the firm “broadly agrees”’ with her assessment of the offer. Jamie Pike, chairman of Cobham, says that it would be willing to accept higher offers, but none have yet come through.
Sanderson’s intervention comes as former naval chief Admiral Lord West said he is “deeply concerned” about a sale. He has urged the Government to assess the deal, adding another voice to a growing opposition led by the Cobham family that includes former Defence Secretary Michael Heseltine, former Business Secretary Vince Cable and former executives. They have said that the Business Secretary Andrea Leadsom and Defence Secretary Ben Wallace investigate the proposed takeover before allowing it to go ahead.
Leadsom has the power to intervene and block foreign buyouts if they pose a threat to national security, financial stability or media plurality. Leadsom has met representatives from Cobham and Advent but has yet to suggest that she will intervene.
Shares fell 1.9%, or 3.1p, to 156.6p. Cobham and Advent declines to comment.