UK seeks eleventh-hour assurances from Melrose on hostile GKN bid

Turnround group insists ‘we are British’ after letter from business secretary

 

The UK government has written to Melrose seeking a number of assurances over the turnround group’s proposed hostile takeover of GKN, with an eye to deciding whether a deal would pose “concerns relating to national security”.

In a letter dated Monday but published on Tuesday, business secretary Greg Clark demanded commitments that “would need to be binding” if Melrose’s pursuit of the engineering group were successful, including keeping a UK headquarters and listing, keeping a UK workforce, continuing to pay UK tax and maintaining research and development programmes. Melrose responded that its “commitment throughout has been clear...We are British and work in the national interest”.

Mr Clark said he felt “it would be timely” for Melrose to address outstanding issues quickly, given the “advanced state of the takeover timetable”.

He also outlined specific concerns relating to GKN’s work for the UK armed forces: “I recognise that any listed company may be subject to future takeover and so cannot guarantee its ownership indefinitely.

“However, I am concerned that a short-term approach to ownership may not be compatible with maintaining the longer-term relationships which characterise the best interests of the defence field. In the light of this I would expect to see a commitment to continuity of ownership and strategic investment specific to the defence related business of GKN and to exclude the option of a short-term sale of this business without the consent of the Government. I am aware that you are separately discussing with the Ministry of Defence the terms of an agreement that would satisfy any concerns that the Defence Secretary may have.”

MPs from across the political spectrum have called on Mr Clark to block the deal to prevent a “world class” industrial company from being “dismembered”.

– Copyright The Financial Times Limited 2018