Ministers have intervened in a flurry of foreign takeover attempts on British defence firms in the past year over concerns the bids posed a threat to national security. The government unit that scrutinises takeovers “called in” 24 proposed bids from foreign buyers between the first quarter of 2025 and end of the first quarter of 2026, according to a Freedom of Information Request made by the Cabinet Office.
Of these, ten deals probed by the Investment Security Unit (ISU) targeted the UK’s defence sector. Nine of these were from foreign private equity or investment banks and one fell under the sovereign wealth fund or state-owned vehicle category.
“The UK is a recognised leader of quality in terms of our defence manufacturing capability, and that does make us a very attractive place for people to come and buy,” said Robert Gardner, global co-lead geopolitical risk and national security at Hogan Lovells.
“Clearly, that needs to involve a national security layer to ensure that we’re not arming our adversaries or giving up control of data to those who would use it against us.” Defence topped the list of probed foreign private equity acquisitions, followed by critical suppliers to the government.
Investment control partner at Mayer Brown, Mark Hills, said there would likely be a “high degree of overlap” between the two. He added defence sits in “crosshairs” where it is “a strategic priority for the UK from an industrial policy perspective, but it is also an area where there are clear and obvious concerns with foreign ownership over the defence supply chain.”
The figures came as former prime minister Keir Starmer attempted to put the UK’s defence sector on firmer footing in one of his final acts as prime minister. In the long-awaited defence investment plan, Starmer coughed up just half the amount of funding military officials had been lobbying for with a £15 billion package.
“One of the decisions ministers have to make is on the balance between protecting national security and being able to sell some of the strongest sectors we have in the UK overseas,” Gardner said.
The ISU was established ahead of the National Security and Investment Act officially coming into force on January 4, 2022. The figures also revealed a handful of bids from state-owned operations to artificial intelligence and data infrastructure companies faced government scrutiny.
The figures reflect a wider rise in foreign takeovers on the London market over the past year as some of London’s biggest listed companies have fallen into the sights of foreign buyers.
A government spokesperson said: “The Government routinely scrutinises acquisitions to ensure they do not pose a risk to the UK. All acquisitions are considered on a case-by-case basis.
Meanwhile – Manufacturers in the UK have overcome a gloomy economic outlook across the country as business boosted production to levels not seen in almost two years, new data has revealed.
According to S&P Global’s monthly survey of output across manufacturers, business activity continued to increase in what was the ninth consecutive month of growth in the sector.
The purchasing managers’ index (PMI) an aggregate score outlining growth trends came to 51.9. This was above the 50-figure threshold for neutrality in output. Manufacturers also said that output and new orders rose at faster rates than in the previous two months though small-scale manufacturers suffered a “mild downturn” in production volumes.
The positive PMI reading reflects manufacturers’ relative optimism about the UK economy, with firms still expecting further increases to output over the next 12 months despite fears of further trade breakdowns and extra tax hikes.
Director at S&P Global, Rob Dobson said: “Increase in production levels has hit a near-two-year high.”
Andy Jalil
The writer is our foreign correspondent based in the UK.
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