Page 66 - Five Forces of Americanisation Richard Hooke 04072025 final post SDR1

The UK Defence Industry in the 21 Century
st
The Five Forces of Americanisation

analysis over the next few pages in this paper. Its characteristics illustrated the extent of the damage
inflicted on the UK’s Defence & Security capabilities by UK Defence Reform, exposing the myth of
business and commercial rationality in the process. This myth has also been exposed by the more
aggressive use of debt available to private fund managers, who are unconcerned by the rigour of credit
ratings agencies like Moody’s or S&P. Cobham’s decline, sale and break up will undoubtedly become
a business school case study but it does serve to demonstrate that, if not corrected early, defects in
management and accounting will lead to mistakes that can rapidly escalate into potential failure. It
also demonstrates, however, that, with the appropriate analysis, failure can be predicted. (See
Appendix 1). A vigilant, stable board of directors should therefore be able to take appropriate action
and head off the dubious attraction of a bid from private equity in an obvious act of arbitrage. If, as in
Cobham’s case, its board is unable to instigate corrective executive action then a major customer, like
the MoD, should reasonably be expected to explore the scope for constructive intervention. The MoD
was unable to do so in this case. This would tend to characterise one of the disadvantages arising from
the “adversarial relationship” between industry and the MoD created by Defence Reform.
While the Financial Times suggested that shareholders should have secured a better price arising
from a more sensible and substantially higher “sum of the parts” valuation, The Guardian’s Nils
Pratley was more direct: “the takeover of Cobham is rotten on purely commercial grounds. A
timid board rolled over too easily and weak shareholders voted by a 93% majority for the sugar
rush of a 34% takeover premium … A well-run Cobham … could surely have done better over the
long term by keeping its independence. Short-termism won and may continue to do so – Advent
will probably make a bumper profit by selling Cobham in pieces within five years”
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(The Guardian, 19 September, 2019)
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The Sale of Cobham plc to Advent International

The Business Secretary decided that Cobham’s sale would not be a threat to national
security. However, much of the evidence presented to the Competition & Markets
Authority (“CMA”), including from the MoD, found that the capabilities to be sold
were of significant value to UK defence, both now and in the future, where their
further development would accord with the UK’s military priorities – not those of a
new owner’s host country. Evidence submitted also contended that the proposed
buyer was unsuitable and would break up the company, damaging UK security
interests (which turned out to be the case). What was clear, however, is that its
disposal would deplete the UK’s DIB and signal a relaxed attitude to sustaining
valuable defence capabilities. Capabilities that included those attributes (in-flight
refuelling equipment, for example) relevant to the deployment of expeditionary
forces. Cobham’s disposal also reinforced the notion, gleaned from the “on-shore
only” priorities for the UK DIB outlined in the 2019 DSIS, that overseas deployments
might be considered less of a priority for UK defence in future. It also passed up an
opportunity for the UK to retain a critical presence in the notoriously expensive and
relentlessly exclusive US Air Force KC-46 air tanker programme. In the new,
“transactional” world being defined by President Trump, this could appear naïve. It
was certainly commercially and, very probably, politically wasteful.

Given the US President’s decision in March, 2025, to “pause” the supply of equipment
to Ukraine, a relaxed attitude to defence technology was not a stance likely to attract
American respect. In stark contrast, the astonishing story of the USAF KC-46 (outlined

in this paper as Case Study 2) , underscores the USA’s dogged commitment to
developing a capability of enormous significance to the US Armed Forces: a critical
force-multiplier, it increases the endurance capacity of the world’s most advanced
combat aircraft: a significant embodiment of power projection.

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07/07/2025 Richard Hooke 2025