The government unit responsible for vetting acquisitions scrutinised ten foreign takeover bids UK defence firms received in the twelve months to end-March 2026, with nine originating from private equity or investment banks and one from a sovereign wealth or state-owned vehicle, according to a Freedom of Information request filed with the Cabinet Office.
The figures place defence at the top of all sectors reviewed by the Investment Security Unit (ISU), ahead of critical government suppliers, of which there were eight probed deals in the same period.
ISU call-ins reach 24 across all sectors
The ISU called in 24 proposed bids from foreign buyers between the first quarter of 2025 and the end of the first quarter of 2026. The defence and critical-supplier tallies together account for the bulk of those interventions.
The broader picture is one of rising volumes. In the 2024-25 reporting period (year to 31 March 2025), the ISU received 1,143 notifications in total, up from 906 the prior year, according to the NSI Act Annual Report 2024-25. The unit accepted 1,110 of those and rejected 37, compared with 876 accepted and 24 rejected in the previous period.
The same annual report recorded 17 final orders issued in 2024-25: 11 following mandatory notifications, five from voluntary notifications, and one involving a non-notified acquisition.
The ISU’s mandatory notification regime covers acquisitions in defined sectors, including defence, energy, transport, communications, certain government suppliers, artificial intelligence, and synthetic biology, according to Practical Law’s overview of the ISU framework. A voluntary system exists for transactions outside those sectors that may still raise national security concerns.
Foreign takeover bids UK defence firms face a two-sided policy test
Robert Gardner, global co-lead geopolitical risk and national security at Hogan Lovells, told City AM that the UK’s manufacturing reputation makes it a target. ‘The UK is a recognised leader of quality in terms of our defence manufacturing capability, and that does make us a very attractive place for people to come and buy,’ he said. ‘Clearly, that needs to involve a national security layer to ensure that we’re not arming our adversaries or giving up control of data to those who would use it against us.’
Mark Hills, investment control partner at Mayer Brown, said there would likely be a ‘high degree of overlap’ between the defence and critical government supplier categories. He added that defence sits in a ‘crosshairs’ where it is ‘a strategic priority for the UK from an industrial policy perspective… but it’s also an area where there are clear and obvious concerns with foreign ownership over the defence supply chain.’
Patrick Sarch, head of UK public M&A at White & Case, pointed to undervalued public markets as a driver. ‘With the UK’s public markets remaining undervalued relative to many other markets, overseas buyers are capitalising to acquire some of the world’s leading defence companies,’ he told City AM. ‘The UK has become great at exporting companies with real potential, and it is not surprising for the government to look at some of these deals to ensure critical capabilities and national interests remain protected.’
The data follows Sir Keir Starmer’s long-awaited defence investment plan, which committed a £15bn package, roughly half the amount military officials had sought.
A government spokesperson said: ‘The Government routinely scrutinises acquisitions to ensure they do not pose a risk to the UK. All acquisitions are considered on a case by case basis. The National Security and Investment Act enables the UK to continue championing open investment, whilst protecting national security.’
The ISU was established ahead of the National Security and Investment Act coming into force on 4 January 2022. On 22 July 2025, the Cabinet Office published its fourth annual report on the Act and simultaneously launched a consultation proposing the first material changes to the screening regime since its introduction, according to Kirkland & Ellis’s analysis of the NSI Act update.
The FOI figures also reflect a wider surge in foreign interest in London-listed assets. US logistics group Prologis recently tabled an all-share proposal valuing Segro at £12.6bn, or 925p a share, a 24.6% premium to Segro’s closing price of 742p. Segro’s board ‘unanimously and unequivocally’ rejected the offer, saying it ‘falls a long way short’ of the company’s assessed value, according to Proactive Investors.
The outcome of the Cabinet Office consultation on reforms to the NSI Act regime will set the boundaries for how much further ministers can tighten scrutiny without deterring legitimate overseas investment in UK defence.