The sale of a British aeroplane-parts maker to China has been delayed by the Government on national security grounds.
Business secretary Greg Clark has asked the markets watchdog to conduct a probe into Northern Aerospace’s sale to Gardner Aerospace over fears crucial UK products could fall into Chinese hands.
Gardner is based in Derby but is owned by Chinese miner and aerospace company Shaanxi Ligeance Mineral Resources (SLMR).
Critics said the decision to refer the £44million takeover of Northern Aerospace to the Competition & Markets Authority risked deterring investment from China at a time when the Government is keen to boost trading ties between the two countries.
Business secretary Greg Clark has asked the markets watchdog to conduct a probe into Northern Aerospace’s sale to Gardner Aerospace
But former defence minister Sir Gerald Howarth, who has long raised concerns about communist China’s takeovers in the UK, said: ‘I am delighted. I think we need to be crystal clear that one thing we really do have in this country is a flair for innovation and manufacturing.
The Chinese are desperate to conquer our technology and we just need to be very conscious of that. It does not mean to say we don’t trade with China. We need to protect our British national interest so I warmly welcome this.’
Exactly why the Government has chosen to intervene is not clear. One source said it had almost stepped in when private equity group Better Capital, led by venture capitalist Jon Moulton, sold Gardner to Shaanxi last year.
Officials made a last minute request for information after another manufacturer raised concerns over a part made by a Gardner subsidiary. But the inquiries did not lead to formal intervention.
Deals that raised eyebrows
2005 Italy’s Finmeccanica bought BAE’s comms and avionics business for £364million
2005 America’s Lockheed Martin bought UK military comms firm Insys
2007 US firm General Electric’s purchase of UK’s Smiths Aerospace for £2.5billion
2009 Atlas Electronic UK bought UK defence firm Qinetiq’s underwater systems division for £23.5million
2017 Chinese firm Hytera bought Sepura, the UK firm that makes walkie talkies for the emergency services, for £74million
Gardner employs more than 1,500 staff around the world and customers include Rolls-Royce and GKN. It makes parts for Airbus’s A400M military plane.
Northern Aerospace, also owned by Better Capital, employs about 600 in the UK and Poland, and uses high-tech software to make parts for plane makers including Airbus and Boeing. It made sales of £71million last year.
Shaanxi is worth around £1.1billion on the Shenzhen Stock Exchange in China. Bosses are thought to have ties with the Chinese government.
Shaanxi’s main activity is mining, with a grip on rhenium, used for airplane engine parts, through its rhenium mine in China’s Shaanxi province.
Its aerospace vice-president Lizhi Wang said last year of its plans to ‘consolidate the global aerospace supply chain’.
After the Gardner deal, he said he had plans to buy more foreign companies to cash in on the booming aviation sector.
Jason Steen, partner at M&A advisory firm Steen Associates, who advised SLMR in its purchase of Gardner, said: ‘Shaanxi are extremely good investors in British business.
So for us to suddenly turn around as a nation and suggest Chinese investment in aerospace is not welcome I think would be bad deal and may call into question further investment in the sector.’
Better Capital said it was only made aware of the Government’s intervention late on Monday night and was surprised.
Moulton did not respond to requests for comment.