Quick Take: Chinese Purchase of British Airplane-Parts Maker Crashes

A Chinese buyer has abandoned its plan to purchase British airplane-component maker Northern Aerospace Ltd. after the deal was held up by a national security probe.

Gardner Aerospace Holdings Ltd., the British unit of Chinese aerospace and mining firm Shaanxi Ligeance Mineral Resources Co., had agreed to buy Northern Aerospace for around $58 million. But the deal hit some turbulence last month when Britain’s secretary of state for business, energy and industrial strategy ordered the Competitions & Markets Authority (CMA) to investigate the transaction on national security grounds.

Northern Aerospace’s current owner, private equity firm Better Capital PCC Ltd., said the two sides abandoned the deal after failing to get CMA clearance before their own Monday deadline to close the purchase. The government agency has until this Friday to issue its report and verdict.

“It’s fair to describe me as miffed,” Better Capital Managing Partner Jon Moulton was quoted as saying in British newspaper The Guardian. “We believed we’d addressed the issues satisfactorily, but there remain unspecified national security issues and we don’t know what they’re talking about.”

Reports suggest that the investigation was ordered because of concerns over Northern Aerospace’s contracts with the U.K. Ministry of Defense. More details are likely to be forthcoming when the CMA submits its report.

While the U.S. has increased its scrutiny of Chinese investment in its companies in the last two years, the U.K. has proved a relatively more-welcoming environment for deals in such sensitive areas as microchips, telecoms and aerospace.

Contact reporter Ke Dawei (daweike@caixin.com)