UK private equity firm Better Capital PCC Ltd’s sale of airplane parts firm Northern Aerospace Ltd (NAL) to a Chinese buyer has fallen through after regulators did not issue approval following a probe into national security concerns.
The UK Competition and Markets Authority (CMA) last month launched an investigation into the ￡44 million (US$58.73 million) sale of the company to a unit of China’s Shaanxi Ligeance Mineral Resources Co (煉石有色), issuing a notice halting the disposal.
That followed a formal intervention by the British Secretary of State for Business, Energy and Industrial Strategy under rules allowing it to take action on national security grounds.
Better Capital said Northern Aerospace had clearly demonstrated that there were no competition issues in the deal and that all matters raised by the British Ministry of Defence had been satisfactorily dealt with.
“NAL and [Better Capital unit] the GP have been advised that there are national security issues, but neither has any knowledge of their nature and both remain ignorant as to how the disposal of NAL could give rise to any transaction-specific concern,” the company said.
A string of acquisitions by Chinese companies across the world has fueled security concerns in countries including Germany, the US and Canada, leading to some high-profile blocks on deals.
Britain last year laid out proposals to have more say over deals in its military and technology sectors, as the government tries to prevent homegrown companies in sensitive industries from falling into foreign hands, marking a shift for a country that has traditionally been one of the most open to foreign buyout deals.
Better Capital last month agreed to sell Northern Aerospace to Gardner Aerospace Holdings Ltd, owned by the Chinese company.
Under the ministry intervention, the CMA had until Friday to submit a report on the competition and national security aspects of the proposed deal.
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