HomeEverything
Equities & FundsCrypto & Digital AssetsAI & TechnologyBusiness & CorporateUS Politics & PolicyGeopolitics & Global RiskMacro, Rates & FXCommodities & EnergyEuropean Politics & MarketsAsia-PacificReal Estate & Property
← All Stories

UK government scrutinizes foreign takeover bids for defense firms

Created at 2 Jul · 2:30 AM1 source↑ Market-relevant
IN SHORT

The UK government's Investment Security Unit (ISU) called in 24 proposed foreign takeover bids between Q1 2025 and Q1 2026, with ten targeting the defense sector due to national security concerns. Nine of these were from private equity or investment banks, and one from a state-owned entity.

✉Newsletter

PiQ Daily

Pick your topics. Get only what matters, on your cadence.

Key Numbers

24proposed foreign takeover bids scrutinized
10defense sector bids probed
9defense bids from foreign private equity/investment banks
1defense bid from sovereign wealth fund/state-owned vehicle
January 4, 2022National Security and Investment Act effective date
£15bndefense investment package announced by Sir Keir Starmer
£12.6bnvalue of Prologis' acquisition of Segro

Who's Involved

Cabinet Office
Provided data on scrutinized takeover bids
Investment Security Unit (ISU)
Government unit scrutinizing foreign takeover bids
Robert Gardner
Global co-lead geopolitical risk and national security at Hogan Lovells
Mark Hills
Investment control partner at Mayer Brown
Sir Keir Starmer
Former Prime Minister who announced a defense investment plan
Prologis
US giant that agreed to buy Segro
Segro
FTSE 100 real estate firm targeted by Prologis
Patrick Sarch
Head of UK public M&A at White & Case
UK government scrutinizes foreign takeover bids for defense firms

↳ Why This Matters

The government's increased scrutiny of foreign takeovers in the defense sector signals a heightened focus on national security and strategic industrial policy, potentially impacting future M&A activity and the availability of capital for UK defense companies.

Key facts

  • The UK government's Investment Security Unit (ISU) reviewed 24 foreign takeover bids between Q1 2025 and Q1 2026.
  • Ten of these bids targeted UK defense firms.
  • Nine of the defense sector bids were from foreign private equity or investment banks.
  • One defense sector bid was from a sovereign wealth fund or state-owned vehicle.
  • The ISU operates under the National Security and Investment Act, established in January 2022.
  • The government stated that all acquisitions are considered on a case-by-case basis.

The UK government has intervened in numerous foreign takeover attempts of British defense firms over the past year due to national security concerns. According to data obtained via a Freedom of Information request, the government's Investment Security Unit (ISU) 'called in' 24 proposed bids from foreign buyers between the first quarter of 2025 and the end of the first quarter of 2026. Of these, ten deals specifically targeted the UK's defense sector, with nine originating from foreign private equity or investment banks and one from a sovereign wealth fund or state-owned entity.

Experts note that the UK's strong defense manufacturing capabilities make it an attractive acquisition target, necessitating a national security layer to prevent adversaries from gaining control of sensitive data or capabilities. Defense firms topped the list of scrutinized foreign private equity acquisitions, followed closely by critical government suppliers. This scrutiny highlights a strategic priority for the UK in maintaining control over its defense supply chain.

The figures emerge as the UK's defense sector faces funding challenges, with a recent £15 billion package announced by former Prime Minister Sir Keir Starmer falling short of military officials' requests. Ministers are balancing the need to protect national security with the economic benefits of selling strong domestic sectors overseas.

The ISU was established in anticipation of the National Security and Investment Act, which officially came into force on January 4, 2022. The data also indicated government scrutiny of bids from state-owned entities targeting artificial intelligence and data infrastructure companies. This trend reflects a broader increase in foreign takeovers on the London market, with undervalued UK companies becoming targets for overseas buyers. The government maintains that it routinely scrutinizes acquisitions to ensure national security is protected while continuing to champion open investment.

Frequently asked questions

The Investment Security Unit (ISU) is a UK government unit established to scrutinize foreign takeover bids for national security risks.

The ISU called in 24 proposed bids from foreign buyers between Q1 2025 and Q1 2026.

The defense sector was the most scrutinized, followed by critical suppliers to the government.

The National Security and Investment Act, effective January 4, 2022, provides the legal framework for the government to review and intervene in mergers, acquisitions, and other transactions that could pose a national security risk.

What Happens Next

01The government will continue to scrutinize acquisitions on a case-by-case basis.
02The National Security and Investment Act will continue to enable scrutiny of foreign takeovers.

Get the newsletter.

Pick the topics you actually care about. We'll email when there's news worth your time, on the cadence you choose. Cancel any time from your account.

Cadence

How It Developed

The government unit scrutinizing takeovers called in 24 proposed bids from foreign buyers.
Ten of these deals probed by the Investment Security Unit (ISU) targeted the UK's defense sector.
Nine of the defense sector deals were from foreign private equity or investment banks.
One defense sector deal was from a sovereign wealth fund or state-owned vehicle.
The ISU was established ahead of the National Security and Investment Act coming into force on January 4, 2022.
Figures also revealed scrutiny of bids from state-owned operations to AI and data infrastructure companies.
The government stated it routinely scrutinizes acquisitions to ensure they do not pose a risk to the UK.

Sources

T1
Government intervenes on foreign takeover bids for UK defence firmsCity AM

Related Stories

Spain quietly bans Palantir over national security concerns
1 Jul · 8:05 PM
Starmer claims £22bn fiscal headroom can cover defence funding gap
1 Jul · 1:20 PM
UK government launches National Lottery review for public input
1 Jul · 1:06 PM
Ministers 'furious' over road project cuts for defence plan
1 Jul · 7:50 AM
Canada Pitches Critical Minerals Partnership to Japan Amid China Trade Squeeze
1 Jul · 8:10 PM