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Chinese Fund Walks Away from UK Defence Firm Deal, After Gov’t Intervention

“I will not hesitate to use my powers to protect national security."

By CBR Staff Writer

A Chinese fund has walked away from a hostile bid for British defence manufacturer, Mettis Aerospace, after the Business Secretary raised national security risks and flexed powers under the Enterprise Act 2002.

Aerostar is registered in the People’s Republic of China and is overseen by the firm Ligeance Aerospace Technology Co. Ltd. Based in Xianyang the company employs more than 2,500 people. Its main focus is the manufacturing of aircraft-related precision components and structural parts. These parts are used in an array of aircraft such as commercial airlines, helicopters and industrial products. It also operates some mining facilities in china.

Last December it emerged that it was looking to acquire the UK aerospace and defence contractor Mettis Aerospace. When details of a potential merger broke the UK government issued a public interest intervention notice.

Under the Enterprise Act 2002 the UK Secretary of State for Business, Energy and Industrial Strategy has the power to intervene in a company merger if it’s deemed that it would be in the national interest.

Last December, then-Business Secretary Andrea Leadsom commented: “I will not hesitate to use my powers to protect national security, if it is appropriate to do so. Following careful consideration, I have issued an intervention notice which orders the Competition and Markets Authority to investigate the national security concerns and competition aspects in this case.”

Mettis Aerospace

The company was founded in 1938 under the name High Duty Alloys. During WW2 itproduced more than ten million components for British aircraft engines. Mettis currently makes components for Airbus, Boeing, Bombardier, GKN Aerospace, GE Aviation, Honeywell, Kawasaki, Leonardo Helicopters, Rolls-Royce, Safran, Spirit Aerosystems and United Technologies.

Mettis earlier noted that: “As a successful, growing company, we are regularly approached by organisations interested in Mettis Aerospace. We recently received an unsolicited approach from Aerostar, however, we are not having ongoing discussions and are not considering selling Mettis to Aerostar.

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“We have invested over £25 million in the last five years in our forging, machining and sub assembly capabilities and have also invested in a new factory which is opening in early 2020. We have been creating jobs and winning key contracts for the West Midlands region.”

Mettis also told the CMA that: “Aerostar’s interest in Mettis constituted an inbound enquiry which was in no way solicited by Mettis or any of its affiliates. Mettis told the CMA that no information memorandum, sale information brochure or similar document has been prepared by Mettis or any of its affiliates.”

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