Government orders public interest probe into Chinese takeover of UK walkie-talkie company over national security concerns

William Turvill
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Sepura provides walkie-talkie equipment across a number of sectors, including in emergency services (Source: Getty)

The UK government has ordered a national security probe into a Chinese takeover of UK walkie-talkie maker Sepura.

The secretary of state for business, energy and industrial strategy (BEIS) has issued a public interest intervention notice (PIIN), with the investigation focusing on national security. It marks the 12th PIIN issued by the government under the Enterprise Act 2002, seven of which have been on national security grounds.

China’s Hytera Communications agreed a £74m deal for Cambridge-based Sepura in December.

Sepura provides walkie-talkie equipment across more than 40 countries and a variety of sectors, including emergency services such as policing. It also works in transportation, airports, oil and gas, mining and manufacturing.

Read more: Takeover policy back in spotlight as Theresa May backs National Grid deal

The UK firm’s shares dropped six per cent to 12.16p this morning after it announced the intervention.

The deal is being investigated by the Competition and Markets Authority (CMA), which has until 4 May to complete its review.

Today’s PIIN means that secretary of state Greg Clark will then make the final decision on whether the deal should be referred to an in-depth, phase two investigation by the CMA, taking into account both competition and public interest issues.

A BEIS spokesperson said:

The secretary of state has issued a public interest intervention notice on the grounds of national security. This requires the Competition and Markets Authority to investigate and report on the proposed takeover of Sepura. This is a statutory process we have followed a number of times before to ensure national security is protected.

The government encourages inward investment to the UK, but we must also protect our national interests.

The intervention comes at a time when the government’s approach to foreign takeovers is coming under the spotlight.

Read more: Chinese firm to offer £90m for walkie-talkie maker Sepura

Notably, the takeovers of Cambridge chip designer Arm by Japan’s SoftBank and the National Grid gas pipes network by an international consortium have been waved through. The government also, after consideration, approved the Hinkley Point C project.

Dealmakers are waiting to see how the government, and the Department of Business, Energy and Industrial Strategy in particular, will address foreign takeovers in a green paper expected in the coming weeks.

City A.M. reported last month the consultation may include a proposal that foreign bidders for stakes over a certain size, possibly 25 per cent, in critical national infrastructure assets should be subject to government scrutiny.

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