A group of cross-party MPs has written to the business secretary Greg Clark, urging him to block a proposed £7bn hostile takeover of the British engineering company GKN by turnaround specialist Melrose.
Ahead of a select committee appearance by executives from both companies on Tuesday, the 16 MPs asked Clark to intervene in order to prevent a “world class” industrial company from being “dismembered”, relating to concerns that Melrose would break the 259-year-old company into pieces before selling it off.
“A takeover of GKN by Melrose is highly likely to mean the break-up of GKN, and the selling on – and possible disappearance – of several of its constituent important components including its aerospace, driveline, powder metallurgy and additive divisions,” the MPs wrote, according to the Financial Times.
GKN faces renewed fight with ‘asset stripper’ Melrose
The letter was written by Labour MP Jack Dromey and Conservative MP Rachel Maclean and all signatories have a GKN plant or one of its suppliers in their constituencies. The company employs about 58,000 people, 6,000 of whom are in the UK.
The Pensions Regulator warned separately that the potential deal is likely to have a “detrimental impact” on the company’s ability to fund its pension scheme.
In a letter published by the Commons work and pensions committee, the regulator wrote: “From the outset we have been concerned that the increased leverage involved in the proposed takeover by Melrose is likely to have a detrimental impact on covenant.”
As well as executives from both GKN and Melrose, union representatives will be questioned about the proposed takeover on Tuesday by MPs on the business, energy and industrial strategy committee.
Those opposed to the deal are hoping that the government will consider using the powers it has to block takeovers for national security reasons. GKN works in the automotive and aerospace sectors, including sensitive areas such as technology for the US defence company Lockheed Martin’s F-35B fighter jet, 138 of which have been ordered for the Royal Air Force.
Vince Cable, the leader of the Liberal Democrats and former business secretary, has described Melrose as an “asset stripper” whose bid for GKN poses a serious threat to Britain’s industrial strategy.