Andrew Sukawaty, the ex-non-executive chairman and founder of British satellite pioneer Inmarsat should have been ashamed.

Just two years after selling out to private equity barons Apax and Warburg Pincus, the UK firm, with its fine record of research and development (R&D), is being sold on to an American rival at a profit close to £1billion.

Inmarsat’s former management let investors down by failing to secure the best price but more importantly paved the way for a US competitor to gain access to valuable satellite communications technology.

Tech pioneer: Just two years after selling out to private equity barons, satellite firm Inmarsat, with its fine record of R&D, is being sold onto an American rival at a profit close to £1bn

Tech pioneer: Just two years after selling out to private equity barons, satellite firm Inmarsat, with its fine record of R&D, is being sold onto an American rival at a profit close to £1bn

The close security partnership between Australia, the US and Britain could make it difficult to fear strategic leakage. Worse, Inmarsat and its entire science have been shipped to overseas buyers so quickly.

Cobham is still evident in Advent’s rapid sale of the technology for flight refuelling to an American competitor. 

Lady Cobham is the holder of the family’s heritage. She noted that the Americans had tried to purchase British fuelling technology for many years, but were stopped by the Dorset Company. 

The aerospace knowledge that helped to win the Falklands war was quickly lost under the covetousness of Covid and private equity ownership.

What both the Inmarsat and Cobham takeovers demonstrate is that when private equity spins a yarn about providing new capital, better management and preserving the UK’s science, technology and manufacturing base, the pledges are too vague.

Many private equity investors are only interested in fast turnarounds. Long-term investments will not be attractive to them.

There is a pile of guff from Inmarsat’s new proposed California owner Viasat about more R&D and being better able to compete with low-orbit satellite companies such as Elon Musk’s Starlink.

Britain already has some skin in the game having invested taxpayers’ money on Oneweb, bought out of US bankruptcy.

The real prize for the Americans is Inmarsat’s breakthrough tech for in-flight communications, which has huge commercial value and potential national security uses.

The Government has been working to obtain binding commitments in order to invoke a National Security and Investment Act Review, which could be retrospectively imposed. It is seeking assurances on R&D, manufacturing and jobs.

Cold experience tells us that such stipulations – look at Cobham! – are far from binding. This deal is highly likely to be subject to a Competition and Markets Authority investigation due its overlap.

Kwasi Kwarteng, Business Secretary of the Republic of South Africa has demonstrated a remarkable willingness to take action regarding the sale of Ultra Electronics to Meggitt. This is in stark contrast to his previous hands-off approach.

There is another opportunity for Kwarteng to set up a Kwarteng philosophy that balances free market capitalism with national interests.

There are frills and spills

One of the benefits to being an openly traded public company is that it doesn’t require executives to follow current trends.

Associated British Foods (ABF), Primark’s owner, is under immense pressure to move digital in order to be more competitive with online upstarts Asos and Boohoo.

Primark is growing in popularity across the UK, Europe, and America as others leave or disappear from high street fashion. Its simple, fast fashion continues to thrive in an environment that is Cop26 aware of climate change.

Primark suffered a terrible pandemic. However, ABF which makes more than half its revenue from food, was there to help. After a bumpy 2020-21 due to closures it expects a £2billion jump in sales this year and plans to hold margins at 10 per cent. Its sales model only really makes sense if it doesn’t have to cope with online logistics.

They have clear intentions. The company plans to increase its stores from 398 to 529 by 2026, and will reward investors with a special dividend. The old-style shopping trend is still alive and well.

The breaking up

American industrial conglomerate GE’s decision to separate itself into three quoted entities is the end for an era.

In the days of legendary boss Jack Welch, GE was the US’s most valuable company, and it still had revenues of £132billion in 2008, seven years after he retired.

It plans to split out energy and healthcare, and keep aerospace as its core, shedding £56billion of debt. This seems ambitious.

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