Chemring manufactures flares and decoy measures to deter missile attacks on aircraft

A British defence company that supplies the Royal Air Force has received a £1bn takeover approach from a private equity firm.

Chemring (CHG.L), which supplies countermeasures for Typhoon and F-35 jets, has reportedly received and rejected an offer from Boston-based Bain Capital in the past few weeks.

The US company offered 390p per share, according to Sky News. That is only 32p more than what the FTSE 250 (^FTMC) company’s shares were changing hands for on Friday. Bain is said to be preparing a second offer.

A spokesman for Chemring, which has not confirmed or denied the approach to shareholders, declined to comment on “speculation”. The company will hold its annual shareholder meeting later this week.

Shares jumped 8.7pc higher on Monday to 389p – just below the reported level of the takeover.

The prospect of a US takeover may raise national security concerns at a time when the UK is under pressure to bolster its independent defence capabilities. Trump administration officials have in recent weeks signalled European allies can no longer rely on the US for military protection, prompting panic across the continent.

The approach would make Chemring the latest British company to be circled by private equity suitors, at a time when overseas investors view domestic companies as “cheap”. Both Britvic and Royal Mail’s owner were recently taken private via takeovers last year.

Chemring specialises in making flares, decoys and “chaff”, small pieces of metal or glass fibre dispersed to confuse radar and incoming missiles. The devices are used by RAF aircraft and many of those operated by the US and other Nato countries.

Its sensors and information division also provides electronic warfare software used to jam communications and devices for detecting chemical and biological hazards.

Like other defence companies, analysts have said it should be well-positioned to benefit from an expected surge in defence spending around the world amid rising geopolitical tensions.

The war in Ukraine has already spurred a wave of rearmament across the West, with the company’s order book getting a boost from the large number of US-made F-35 jets being bought by allies including Britain, Australia and Germany.

Chemring is also set to benefit from American orders for the F-35, with the US Department of Defense preparing to buy more than 2,000 of the jets through to 2044.

Countermeasures and energetics remains the largest part of Chemring’s business by far, bringing in around 60pc or £300m of its annual sales. In 2024, it racked up £523m of orders, taking its pipeline to £933m.

While the Stoxx index for European defence companies has surged 32pc over the past year, Chemring’s shares had barely moved before news of the approach from Bain emerged.

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