Shropshire Star

Government backs GKN takeover by Melrose ​

The takeover of GKN has finally been made official, leaving the fate of 400 workers in Telford and another 1,000 in the Midlands in the hands of Melrose.

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The GKN site in Telford

Business Secretary Greg Clark has cleared Melrose's £8.1 billion takeover of GKN, refusing to block it on the grounds of national security.

Melrose narrowly secured sufficient shareholder approval to buy the engineering giant before the March 29 deadline.

During the bid phase, which was one of the fiercest in recent memory, opponents of Melrose's bid claimed both that it would weaken national security and that the company would lose work because it would be unable to provide assurances to partners about its long-term ownership.

Mr Clark took advice from the Ministry of Defence, with the department agreeing undertakings from Melrose.

Speaking in the House of Commons, Mr Clark said: "The evidence presented to me was that this was a British company taking over another British company, that no such takeover has ever been blocked on national security grounds, and that the Ministry of Defence and the other agencies said there was no reason for intervention on those grounds."

GKN is a 250-year-old global engineering business headquartered in Redditch which employs around one-tenth of its 60,000 staff in the UK.

It has a wheels and structuires plant at the Hadley Castle Works in Telford as well as other factories doted around the Midlands.with about 1,000 workers.

National security implications

However it is seen as having a critical role to play because of its defence contracts and importance to the supply chain.

The undertakings given to the MoD include that the Government must provide its consent before the disposal of the business, or parts of it, that the MoD "considers to have national security implications".

Melrose must also inform the Government in advance of any plans to sell a business or assets which are involved in national security and to give it "early visibility" of any prospective purchasers.

Mr Clark had already secured some commitments from Melrose in the days before the bid deadline which requires Melrose to not sell the aerospace business for at least five years without the Government's consent and to maintain current spending levels on research and development for the next five financial years.

Given Melrose's commitments, some of which are enforceable under contempt of court laws, Mr Clark decided "there are not reasonable and proportionate grounds to make a statutory intervention on the grounds of national security".

Melrose has also agreed to meet with the Department for Business, Energy and Industrial Strategy every six months to provide updates on its ownership of GKN.

Call made for tougher laws over takeovers

Union Unite has called for tougher takeover laws after the bid for GKN received the go-ahead from the Government.

The warning comes as the Business Secretary Greg Clark gave the green light to Melrose’s takeover of the British engineering giant GKN.

Unite is set to meet Melrose in the coming fortnight to press bosses on their plans for the company and secure guarantees over jobs and assurances that were given during the takeover on future investment, pensions and research and development.

Unite assistant general secretary for manufacturing Tony Burke said: “Time will tell whether the assurances given to the Business Secretary Greg Clark and the Ministry of Defence by Melrose are worth the paper they are written on. There are still major question marks over the future of the workforce and job security.

“Unite will be meeting with Melrose’s bosses pressing for further detail over its plans and seeking the job guarantees which are absent from the undertakings given to the Business Secretary Greg Clark.

“GKN was at the forefront of electric vehicle technology and is a major cornerstone to the Government’s industrial strategy. Our fears remain that this could jeopardised with parts of the business sold-off piecemeal and jobs shipped off overseas.”

Unite assistant general secretary Steve Turner added: “The Government needs to learn the lessons of the GKN takeover.”