Planned sale is off after ministers intervened on national security grounds

This article is more than 2 years old

This article is more than 2 years old

One of Britain’s most prominent dealmakers has criticised the government for intervening on national security grounds in the planned sale of Northern Aerospace to a Chinese buyer.

Better Capital, a private equity firm founded by Jon Moulton, announced on Monday that the planned sale of the business to China’s Shaanxi Ligeance Mineral Resources was off.

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A deadline to complete the deal lapsed after an intervention by the Ministry of Defence (MoD), which flagged up national security concerns.

This prompted the Department for Business, Energy and Industrial Strategy to look into the proposed sale, including asking the Competition and Markets Authority to write a report into potential competition issues.

Moulton said the resulting delay had ruined the deal, adding that he was mystified by any suggestion there were national security concerns.

“It’s fair to describe me as miffed,” he said. “We believed we’d addressed the issues satisfactorily, but there remain unspecified national security issues and we don’t know what they’re talking about.

“There’s nothing that would be significant to national security.”

He said MoD officials had provided a list of contracts supposedly involving Northern Aerospace, which makes parts for aircraft.

However, Moulton said some of the contracts on the list appeared to involve completely different companies.

“We were told we have more military contracts than we have. Some of the stuff that was put to us by the Ministry of Defence we didn’t make and had nothing to do with us,” he said.

Northern Aerospace’s only contract relating to defence involves the sale of parts for the wings of Embraer jets used by the Brazilian air force, Moulton said.

He said a sale to Shaanxi would have been positive for the future of the company, which employs 600 people, in the light of the loss of a key contract with the aerospace company Airbus.

“There’s more a threat to jobs than there was [as a result of the deal collapsing],” Moulton added.

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“The company decided it could no longer hang around and see its future badly affected by a process that had neither timetable nor clarity.”

An MoD spokesperson said: “As Northern Aerospace carries out a range of aerospace work, and to ensure that UK national security interests are protected, the defence secretary has requested further analysis on the proposed deal.

“As agreed by all parties, including Northern Aerospace, and as part of the public interest intervention process, we will provide the business secretary with advice on the basis of national security by 13 July.”