Business Secretary steps into Melrose and GKN bid battle
BUSINESS SECRETARY Greg Clark has demanded “extensive and clear” commitments from turnaround specialist Melrose over its £8.1bn bid for UK engineering giant GKN.
In an exchange of letters with Melrose chief executive Simon Peckham, Mr Clark said GKN was a “valued employer” with Government sponsored contracts, and that the firm would have to agree to a list of “binding” agreements if its bid was successful.
Melrose said it was ready to make a five-year commitment to the business, having agreed with the Takeover Panel to maintain its UK listing and headquarters and ensure that a majority of its directors are resident in the UK.
It would also make sure that the Aerospace and Driveline divisions retain the rights to the GKN name and maintain GKN’s current level of research and development investments.
Mr Peckham said Melrose was also prepared to guarantee to maintain ownership of its aerospace unit over that period.
“To demonstrate the strength of our commitment to ensure its improvement and investment programme are not unduly interrupted, we are willing to make a legally binding commitment to you... that subject to below, Melrose will not sell the Aerospace Division before April 1, 2023.”
He added this approach was “in direct contrast to the fire-sale being undertaken by the current GKN board”. Melrose’s letter responded to a number of Mr Clark’s concerns, with the Business Secretary asking for GKN to operate, be listed and headquartered in the UK.