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    ULE   GB0009123323

ULTRA ELECTRONICS HOLDINGS PLC

(ULE)
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Ultra Electronics : UK's Ultra may recommend Cobham's $3.6 bln takeover bid to investors

07/23/2021 | 02:22am EDT

* Offer tops a previous offer by Cobham in June

* Ultra considering offer to shareholders

* Deal may be subject to UK scrutiny over security concerns

* Takeover would help Cobham tap marine defence market

July 23 (Reuters) - Defence group Cobham Ltd has made a $3.6 billion offer to buy UK-based rival Ultra Electronics, Ultra said on Friday, adding that it was considering recommending the bid to shareholders.

Shares in London-listed Ultra, whose major customers include the British and U.S. governments, soared as much as 34% to a record high of 33.18 pounds on the news, below Cobham's offer price of 35 pounds per share plus a dividend of 16.2 pence a share.

The offer, the latest in a flurry of private equity interest in British companies driven by cheap valuations due in part to the pandemic and Brexit, is higher than a 28-pounds-per-share bid made by Cobham in June.

Cobham, based in Dorset, England and founded in 1934, is known for its pioneering air-to-air refuelling technology. It was bought last year by Boston-based private equity firm Advent International, and its U.S. ownership could mean the deal draws national security concerns in Britain.

Both companies have respective technologies used in the U.S. F-35 and Eurofighter Typhoon jets.

Ultra, which had rebuffed Cobham's June offer, said it was considering recommending the latest proposal to shareholders subject to the agreement of various terms, while Cobham said in an emailed statement that it welcomed that announcement.

A purchase of Ultra would help Cobham tap the maritime defence market, where Ultra sells sensors, torpedo and radar systems, mainly to Western customers. The company also makes a range of defence communication equipment and forensics software.

Cobham, which makes devices used in electronic warfare and missiles, said it has "offered assurances that appropriate national security undertakings will be offered to the UK government", without elaborating.

Though national security concerns could arise, there are already other British defence companies with U.S. ownership, said Peel Hunt analyst Henry Carver.

"I don't think that's going to be a sticking point," Carver said, noting the strong defence relationship between the two countries. "This is an offer that shareholders cannot ignore ... we think it likely that a deal will be done," he said.

Cobham said in June it hoped to create a "global defence electronics champion" by buying Ultra as they provide complementary offerings to the United States, UK and other defence allies.

J.P. Morgan Cazenove is Ultra's financial adviser on the offer. (Reporting by Yadarisa Shabong in Bengaluru; Editing by Arun Koyyur, Shailesh Kuber and Susan Fenton)


ę Reuters 2021
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Analyst Recommendations on ULTRA ELECTRONICS HOLDINGS PLC
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Financials
Sales 2021 865 M 1 188 M 1 188 M
Net income 2021 79,1 M 109 M 109 M
Net Debt 2021 46,2 M 63,5 M 63,5 M
P/E ratio 2021 29,1x
Yield 2021 1,86%
Capitalization 2 294 M 3 150 M 3 150 M
EV / Sales 2021 2,71x
EV / Sales 2022 2,58x
Nbr of Employees 4 253
Free-Float 97,8%
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Mean consensus OUTPERFORM
Number of Analysts 7
Last Close Price 32,20 GBX
Average target price 2 743,75 GBX
Spread / Average Target 8 421%
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Managers and Directors
Simon Charles Conrad Pryce Chief Executive Officer & Director
Mark Josceline Sclater Chief Financial Officer & Director
William Anthony Rice Chairman
Andrew Puryear Chief Technology Officer
Carlos Santiago Chief Operating Officer