Engineering & Aerospace News

Melrose Industries acquires engineering giant GKN after government clears deal

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Written by: Hannah Baker | Posted 25 April 2018 16:13

Melrose Industries acquires engineering giant GKN after government clears deal

Business Secretary Greg Clark has given the green light for the sale of one Britain's oldest engineering firms to a controversial investment group.

Mr Clark dismissed claims of a "predatory" takeover as he confirmed the sale of GKN to Melrose Industries in the House of Commons.

The embattled engineering business, which employs 1,600 people at its aerospace division in Filton and 300 in Avonmouth, dates back to the 1900s and was instrumental in wartime manufacturing.

Labour had called for the sale of GKN to be blocked on national security grounds, as the company provides many Ministry of Defence contracts, but this was rejected.

Filton employees are "seriously concerned" about their jobs.

The aerospace sector provides more than 15,000 jobs in the South West, making the region the country’s largest sector employer.

Read more: South West businesses struggling to hire workers with 'specialist skills'

Dale Howarth, an employee at the site and a Unite union representative, said: “I'm worried about what impact it will have for all employees."

Mr Clark told MPs of the numerous assurances given by Melrose as part of the £8.1 billion takeover deal.
The fate of hundreds of GKN Filton workers will be decided today
 
He said: "The MoD has completed its detailed analysis and has agreed with Melrose a series of undertakings specifically to ensure that the Government is informed in advance of any plans to divest a business, a component of the business or assets which engage in activities that the Ministry of Defence considers to have national security implications."

Mr Clark said the Government had been given "suitable protections" from any subsequent sale of the business and had been given assurances over the continuation of contractual obligations "to protect intellectual property and classified information".

Shadow business secretary Rebecca Long-Bailey told ministers the assurances were "not sufficient to guarantee security of the long-term prospects" of the company or the workforce.

She said: "Melrose are reportedly short-termist in their outlook which undermines the long-term thinking required in defence projects.

"What we needed today from the secretary was not just a waving through of the deal, we needed action both in terms of obtaining concrete assurances from Melrose on the future of GKN and its workforce, but also clear plans to reform and widen our takeover regime to protect British businesses.

"I fear the short-term predators already smell their next victim and it's not just Melrose, it's Britain's industrial future."

Read more: Number of new tech companies being launched in South West rises

Mr Clark hit back telling Ms Long-Bailey she had "prejudiced her position" by advancing the takeover should be blocked from the outset and had "given away the ability to have influence".

The Business Secretary added: "This is the responsible way to proceed and she would do the employees and stakeholders of GKN a service if she would engage more forensically in future."

Bristol's metro mayor Tim Bowles and the city’s mayor Marvin Rees have urged the government to protect jobs.

A letter sent to Mr Clark in February, which was also signed by other members of the West of England Joint Committee, said: “GKN acts as an anchor for high productivity sectors in Bristol, supporting innovation and new business investment… The potential takeover could have serious consequences... There could be a loss of high-skilled well-paid jobs, which help support our regional economy."

Melrose won its takeover battle to buy GKN in March after securing the backing of the engineering giant's shareholders.

A total of 52.43 per cent investor votes were cast in favour of the deal, just above the 50 per cent plus one share threshold.

Its victory brought to a close a bitter battle that has raged since January, with unions and MPs warning of job cuts and asset stripping.

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