GKN MELROSE: POLITICAL REACTION TO HOSTILE TAKEOVER

Melrose Industries has narrowly won its hostile takeover bid for GKN.

Following a ten-week battle that saw a war of words from GKN management as well as a number of alternative deals on the table, including a proposal from car parts maker Dana, the shareholders decided by a margin of 52 percent to sell to Melrose.

Despite assurances from Melrose, fears that the new buyer will simply wage a campaign of asset stripping as the takeover promises £8bn to be returned to shareholders, which will inevitably involve selling off parts of the business. Apart from car parts, GKN produces aviation components and has a number of defence contracts, leading to some speculation in the mainstream press that the deal might be stopped on national security grounds.

Business Secretary Greg Clark sought assurances from Melrose, saying that no company was ‘immune’ from takeover. Critics were keen to point out that such ‘assurances’ mean little in law, as was demonstrated when Kraft went back on promises made to Cadbury in 2009.

However, Defence Secretary Gavin Williams appears not to share Clark’s lasse-fare opinion, as he is reported as having ‘serious concerns’ about such a deal.

Former Defence Secretary [and owner of Haymarket Group] Lord Heseltine is quoted in the FT as saying that ‘no other country of our sort’ would allow the deal to go through.

Labour’s Jeremy Corbyn has said that the deal ‘must be stopped’ and that it does not make any sense ‘to put the interests of city speculators over the national interest’.

On completion of the deal, the Head Office in Reddich is tipped to be the first part of the operation to close.

 

 

Published by GregWhitaker

Editor of CAT Magazine and an experienced motoring journalist

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