Block GKN bid ‘to protect the security of UK’

THE hostile takeover of British defence giant GKN should be blocked on the grounds of national security, the head of an influential Commons committee said yesterday. Labour MP Rachel Reeves spoke out after GKN’s top customer, Airbus, said that it would find it ‘practically impossible’ to work with the firm if an £8.1billion bid by Melrose succeeded.

The Government is considering blocking the move over GKN’s work on defence projects such as the US-UK joint strike fighter and the Eurofighter Typhoon.

The Daily Mail is also opposing it with its Save GKN campaign.

Last night, major GKN shareholder Lancaster Investment Management, which has 1 per cent of the stock, came out against the bid by Melrose, which buys firms, slashes costs and sells them at a profit.

It comes after Jupiter Asset Management, which also holds 1 per cent of the stock, rejected the offer.

Miss Reeves, chairman of the Commons business, energy and industrial strategy committee, heard from GKN and Melrose at a hearing last week.

She said: ‘There is a strong case for the Secretary of State for Business, Greg Clark, for calling in this takeover on grounds of national security, because GKN does supply companies like Airbus and others, Rolls-Royce for example, who have defence contracts.

‘There are grounds for looking at this much more closely.

‘It is absolutely true there have been problems and challenges at GKN but, that said, it is not clear to me that the best future for the business is under ownership which has such a short-term horizon.’ Miss Reeves, Labour MP for Leeds West, has called on Melrose to make more detailed commitments on the future of investment and jobs at GKN.

Melrose chief executive Simon Peckham has written to a Parliamentary Committee to insist the company is committed to matching GKN research and development spending, and keeping its HQ in Britain.

But Miss Reeves said: ‘In that letter there was nothing that was legally enforceable.’

She also questioned Melrose’s plan for the pension scheme, noting that the Pension Regulator has asked the turnaround firm to refer itself for approval.

Miss Reeves added: ‘Melrose haven’t done that. So I don’t think people saving for a pension, or who draw their pension from GKN, can have certainty about Melrose’s intentions. They refer to their past takeovers and how they’ve addressed pension deficits there.’

Melrose has stressed it has an exemplary track record on pensions and plans to pay £150million into the fund upfront.