Government asked if it will intervene in hostile bid for GKN
Government questioned over potential intervention in the proposed takeover of GKN by Melrose.
The Government is being asked by the head of a committee of MPs whether there are grounds to intervene in the proposed takeover of engineering giant GKN by Melrose.
Rachel Reeves, who chairs the Business Select Committee, said the hostile bid raised “serious concerns” about protections for the UK’s vital industries.
In a letter to Business Secretary Greg Clark, she said: “It would be helpful to have more detail about the nature of the discussions you have had with the chief executives of both GKN and Melrose.
“ln particular, have you established whether there may be sufficient grounds for you to intervene in the public interest on the grounds of national security?”
Hostile takeover bid for GKN raises serious concerns about protections for our vital industries Rachel Reeves MP
Ms Reeves asked whether, in the light of US firm Kraft’s takeover of Cadbury in 2010, there was a case for revisiting rules covering undertakings made as part of the acquisition process.
She commented: “The hostile takeover bid for GKN raises serious concerns about protections for our vital industries, not least for our industrial strategy, which requires high-skilled jobs in engineering, science and research.
“GKN is important for the automotive and defence sectors of our economy and the Secretary of State needs to provide assurances that Britain’s strengths in these sectors will not be undermined by a takeover or by asset-stripping.”
Steve Turner, assistant general secretary of Unite – which has been urging the Business Secretary to intervene, said: “Melrose’s bid, which is based on borrowing vast amounts of cash to bung to shareholders, will see GKN saddled with £1.3 billion of debt in a move harking back to the ‘cowboy capitalist’ takeovers of the 1980s.
“The short term financial engineering of Melrose’s bid is totally at odds with the long term approach and investment that is needed to power the Government’s industrial strategy.
“Because of GKN’s extensive defence work, the bid also raises serious questions about UK defence interests and capability.”