Business Secretary clears £8.1bn GKN takeover deal
Labour had called for the sale to be blocked on national security grounds.
Business Secretary Greg Clark has waved through the sale of one Britain’s oldest engineering firms to a controversial investment group.
Mr Clarke dismissed claims of a “predatory” takeover as he confirmed the sale of GKN to Melrose Industries in the House of Commons.
Labour had called for the sale to be blocked on national security grounds, as the company provides many Ministry of Defence contracts, but this was rejected.
Explaining the decision Mr Clark told MPs of the numerous assurances given by Melrose as part of the £8.1 billion takeover deal.
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”.
He added: “Melrose have also agreed to meet with me and my officials every six months to provide updates on their ownership of GKN.
“On the basis of the commitments given relating to national security, the Ministry of Defence concluded that statutory intervention is not required.”
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.
I fear the short term predators already smell their next victim and it's not just Melrose, it's Britain's industrial future Rebecca Long-Bailey
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.”
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.”
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% investor votes were cast in favour of the deal, just above the 50% plus 1 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.
GKN dates back to the 1900s and was instrumental in wartime manufacturing.
The firm became a target following profit warnings in October and November after problems at its US aerospace division sent shares tumbling.
GKN is headquartered in Redditch and has its biggest factory in Filton near Bristol, where it employs 1,454 workers.
Other plants in the UK include Cowes, Birmingham, Luton, Telford, Kings Norton, Portsmouth, Uxbridge, Leek and Oxford.