The UK Government is set to investigate the planned takeover of British defence firm Ultra Electronics by a rival company.

The move comes days after Cobham, which is owned by US private equity firm Advent, agreed to buy Ultra Electronics for $3.6bn (£2.6bn).

In a Twitter post, the UK Secretary of State for Business, Energy and Industrial Strategy Kwasi Kwarteng said that he has directed the Competition and Markets Authority (CMA) to prepare a report on the proposed acquisition.

Under the Enterprise Act 2002, the secretary can intervene in mergers and acquisitions on public interest grounds relating to national security.

CMA will submit its report by 18 January next year.

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By GlobalData

Secretary Kwarteng said: “The UK is open for business. However, foreign investment must not threaten our national security.”

He has also tabled an order in parliament to prevent Ultra from disclosing sensitive information to Cobham about the services it provides to the British government and armed forces.

Headquartered in London, Ultra provides application-engineered solutions in the key elements of mission-critical and intelligent systems.

The company particularly operates as a Tier 3 (sub-system) and occasionally a Tier 2 systems provider in the maritime, military and commercial aerospace and C4ISR/EW markets among others.

Ultra’s core markets include the US, Canada, UK, Australia and New Zealand.

After announcing the acquisition, Cobham said it will safeguard the UK’s national security, maintain UK headquarters and increase investment.

It also promised that it will create new jobs and protect existing ones according to a Reuters report.