At long last a British government is taking seriously the risk to Britain’s national security and intellectual property from overseas takeovers.
Business Secretary Alok Sharma has cast the net widely in creating Britain’s equivalent to the Committee on Foreign Investment in the US.
Legislation introduced today will cover 17 sectors of the economy, ranging from artificial intelligence to satellites.
Crackdown: Business secretary Alok Sharma has cast the net widely in creating Britain’s equivalent to the Committee on Foreign Investment in the US
Had this legislation been in place it is hard to believe that recent sales of satellite pioneer Inmarsat and aerospace champion Cobham would have sailed through unhindered.
Under the new arrangements, as many as 1,000 deals a year would be notified to the Business department and it’s expected that between 70 and 95 of these would be scrutinised by a new Investment Security Unit, with members drawn from across government including the security services.
Some ten deals would likely get the ‘full Monty’, leading to them being blocked or severe remedies imposed.
The regime will create work for investment bankers, City lawyers and consultants. It is certain to have an impact on takeover deals in the offing.
One would expect, for instance, that if Garda World continues its pursuit of security group G4S it would fall under the Parliamentary bill, which covers critical suppliers to government.
What could be more significant than security at prisons, some of which house convicted terrorists? If a choice were made to blithely press ahead then the buyer could potentially face a fine of up to 5 per cent of global turnover.
That should be an incentive not to rush into a transaction in the hope that the bill doesn’t become law.
The proposed Softbank £30billion sale of Cambridge-based smart chip maker Arm to Nvidia in the US currently is being scrutinised by the Culture department.
There is a message here for Softbank boss Masayoshi Son. If you go ahead with an Arm sale, before jumping through the hoops, there could be a whopping fine awaiting.
None of this will be great for Melrose, which bought GKN for £8billion in 2019. It has agreed to stipulations that it cannot sell GKN aerospace assets for five years.
Now it potentially faces a fresh obstacle of satisfying the Investment Security Unit before fulfilling its buy, improve and sell mantra.
The same double jeopardy would apply to private equity outfit Advent which reportedly is trying to sell the antennae offshoot Cobham Aerospace Connectivity.
Britain remains open for overseas investment. But it is weaving a complex web.
Vaccine optimism is slowly driving up the price of Brent crude. The mood change has been enough to spark a minor rally in BP and Shell, although both shares are way below where they were a year ago.
It is encouraging to see BP boss Bernard Looney is taking the green push seriously by pressing the hydrogen button.
BP has teamed up with Danish group Orsted to develop zero-carbon hydrogen at its Lingen refinery in Germany. The goal is to replace all fossil fuel production with wind power.
Britain’s National Infrastructure Commission regards hydrogen as one of the great opportunities for green investment.
It opens the possibility of hydrogen-propelled locomotives on Britain’s renewed and expanded rail network.
The hydrogen revolution is already under way elsewhere and is being used to power buses in Canada and Toyotas in Tokyo.
The chemical process for extracting hydrogen is complex and there are safety concerns, addressed by Toyota with super-strong reinforcements to fuel tanks.
Electric vehicles may be the flavour of the moment, but don’t count out hydrogen as an alternative fuel option just yet.
Electrocomponents, which started out selling spare parts to radio enthusiasts in the 1930s, is among those UK industrial companies which passes under the radar.
Under the leadership of ebullient Texan Lindsley Ruth, the electrical parts distributor has expanded digitally and geographically, climbing the FTSE from 270th position to 117th where it can start dreaming of FTSE 100 status.
Covid-era, half-year profits are sharply down but it is confident enough – with rising sales in the US and Pacific – to restore a suspended dividend.
UK consumers flocked to its websites in lockdown to buy components for long-abandoned model trains, cranky radios and the like. Wizard!