By Justin George Varghese
(Reuters) - UK private equity firm Better Capital PCC Ltd's sale of airplane parts firm Northern Aerospace Ltd to a Chinese buyer has fallen through after regulators did not issue approval by Monday following a probe into national security concerns.
The UK Competition and Markets Authority (CMA) launched an investigation last month into the 44 million pound ($58 million) sale of the company to a unit of China's Shaanxi Ligeance Mineral Resources Co., issuing a notice halting the disposal. [nL4N1TK46U]
That followed a formal intervention by the British Secretary of State for Business, Energy and Industrial Strategy under rules allowing it to take action on national security grounds.
The CMA has until July 13 to submit a report on the competition and national security aspects of the proposed deal.
But Better Capital said that the deal had already lapsed in the absence of an approval and that authorities had effectively blocked the sale.
A string of international acquisitions by Chinese companies has fuelled security concerns in countries including Germany, the United States and Canada, leading to some high-profile vetoes of deals.
In its stock exchange filing, Better Capital said Northern Aerospace had clearly demonstrated that there were no competition issues in the deal and that all matters raised by the Ministry of Defence had been satisfactorily dealt with.
"NAL and (Better Capital-unit) the GP have been advised that there are national security issues but neither has any knowledge of their nature and both remain ignorant as to how the disposal of NAL could give rise to any transaction-specific concern," the company said.
CMA said that it was conducting a competition assessment of the deal and that it had not received anything from the companies to indicate they no longer plan to merge.
A Better Capital spokesman said that there were no current talks aimed at reviving the deal.
Britain laid out proposals last year to have more say over deals in its military and technology sectors, as the government tries to prevent homegrown companies in sensitive industries falling into foreign hands, marking a shift for a country which has traditionally been one of the most open to foreign buyout deals.
Better Capital had agreed last month to sell Northern Aerospace to Gardner Aerospace Holdings Ltd, owned by the Chinese company.
($1 = 0.7568 pounds)
(Reporting by Justin George Varghese in Bengaluru; editing by Patrick Graham and Adrian Croft)