GKN and Melrose clash before MPS as takeover hots up

● Unite union warns of ‘asset strippers’ posing a threat to national security

Pressure mounted on the government yesterday to block the proposed hostile £7.4 billion takeover of defence-toautomotives group GKN as the suitor was branded as “asset strippers” threatening UK national security.

GKN finance chief Jos Sclater and union leaders told MPS on the business, energy and industrial strategy committee that the five-year investment timescale of turnaround specialist Melrose was “incompatible” with GKN’S often decades-long work for its clients.

Sclater said: “It’s short-term capitalism versus long-term capitalism. You are investing for your children, that’s what we’ve been doing and that’s what we want to carry on doing.”

Sclater and GKN chief executive Anne Stevens were being grilled by the business committee along with Melrose executives, with the Unite union also giving evidence. Steve Turner, assistant general secretary for aerospace at Unite, added his voice to calls from 16 MPS who had earlier sent a letter to Business Secretary Greg Clark urging him to block the takeover.

He said: “Melrose’s track record is exactly that three to five-year ‘transformation’, they would call it, asset stripping we’d more rightly define it as.

“They take over businesses, they break businesses up, they compartmentalise them and then flog them off to the highest bidder in order to maximise shareholder value. That’s the nature of the business.”

Turner added: “It’s about maximising shareholder value and trousering lots of money. That’s the reality.”

He said that the Business Secretary should “absolutely intervene” on national security grounds.

GKN is involved in sensitive programmes, including technology for US defence company Lockheed Martin’s F-35B fighter jet, 138 of which have been ordered for the Royal Air Force.

Turner said the lifespan of some GKN products could be up to 50 years, from initial design to manufacturing and then service.

Melrose bosses insisted they would not sell off parts of the defence business to buyers that were “inappropriate” on grounds of national security.

“We’re British citizens too,” Simon Peckham, co-founder and chief executive of Melrose, said. “I live in this country. My family lives in this country.

“We are not going to sell GKN military protected assets to anyone who is not an appropriate buyer. We would never do it, even if we were free to.”

He added: “We’re not a charity, we’re a business, but we try to do the right thing.”

The Pensions Regulator warned separately that the potential takeover was likely to impact adversely on the ability of the business, which employs 58,000 people, 6,000 of them in the UK, to fund its pension scheme.

But David Roper, another cofounder and vice-chairman of Melrose, said: “Every single pension scheme in our ownership has been left in a much more stable financial position than before.”