Cobham acquisition fails to calm City jitters

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The Independent Online

The aerospace and avionics group Cobham splashed out £135m yesterday on Remec Defense, a San Diego-based maker of communications equipment for the military.

Cobham, based in Dorset, predicts the acquisition will double revenues from radar equipment, and boost its division specialising in "microwave" technology that allows military vehicles to "talk" to each other.

Remec's technology integrates electronic communications systems in American defence programmes, including the F-35 Joint Strike Fighter. Its US parent, Remec Inc, is selling up to concentrate on the telecoms industry.

Cobham forecasts that the 15 per cent growth in revenues at Remec Defense over the past two years will continue. Allan Cook, the chief executive, said: "Microwave technology and its applications are a fast-growing market segment, particularly in the military and defence sectors."

But the City gave a lukewarm reception to the deal, with Cobham shares down 10p to 1,238p yesterday. They have underperformed the sector by almost one-fifth since mid-September.

One sector analyst said: "This seems a sensible acquisition.... But Cobham needs to rebuild market confidence."

The company told investors this month that it is aiming for revenue growth of about 5 per cent this year, but acquisitions could see that figure double.