Ministers are assessing Melrose’s £7bn bid for GKN over national security concerns
A senior civil servant in the Department for Business, Energy and Industrial Strategy (Beis) has confirmed ministers are examining whether Melrose’s bid for GKN should be blocked on national security grounds.
Alex Chisholm, the department’s permanent secretary, said the assessment was ongoing, but he could not confirm whether a decision would come before or after shareholders vote on the proposed bid.
Chisholm said he and Greg Clark, the secretary of state for business, had separately met with executives at GKN and Melrose.
Industrial turnaround specialist Melrose made a £7.4bn hostile takeover bid for UK engineering giant GKN, which GKN has rejected. Shareholders are set to vote on the matter at the end of March.
Under the Enterprise Act of 2002, Clark could intervene on the grounds of national security, media plurality or financial stability.
GKN’s aerospace unit is heavily involved in defence projects, including the manufacture of parts for the UK’s F-35 stealth fighter and the US’s new main B-21 bomber.
“In mergers of this kind where there is a possibility of national security issues arising, absolutely you would always find that a careful assessment is made, not just by our department, but by other parts of the government as well,” Chisholm told the Beis select committee.
“It’s open to the government to determine whether or not it intervenes, if it chooses to, either before the bid process is complete or afterwards,” he added.
Chisholm said there had been about a dozen cases in which ministers have intervened on the grounds of national security since the Enterprise Act was introduced.
Melrose said: “We welcome the opportunity to appear before the Select Committee. It will allow us to dispel the myths that have entered the debate and reassure the Committee and the wider stakeholder audience of our intention to create a UK manufacturing powerhouse.
“Melrose has an exemplary record of investing in R&D, protecting pension schemes and delivering value for all stakeholders. We believe that while there are no competition or national security issues, it is in fact in the national interest for Melrose to be the guardian of GKN’s businesses. These businesses need to face up to the challenges that its board have finally publicly acknowledged. We believe that Melrose has the right team to transform GKN in the broader interests of UK plc, as well as customers and stakeholders around the world.”
Read more: Melrose presses on with GKN bid despite reporting a loss for the year