MoD looking to see if it can block GKN deal

Business Secretary Greg Clark has revealed that the details of the takeover plan are being looked at by government – including the MoD – as it decides if it will intervene.

The takeover plan, which was approved by the company's shareholders last week, has sparked concerns in Telford, where the firm has a factory that employs more than 340 people.

The government does have powers to block the deal under the 2002 Enterprise Act.

Takeovers can be refused if they are deemed to affect media plurality, financial stability or - as in GKN's case - national security.

Mr Clark said: “As a competitive economy, Britain has always had vigorous contests for the management of public companies. Competition for how a business should best be run drives efficiency and competitiveness, which is important for the economy and stakeholders.

"During the bid, Melrose made commitments which they are bound to honour including investment in research and development and maintaining itself as a UK business.

"Now that shareholders have made their decision the Government has a statutory responsibility to consider whether the merger in its proposed final form gives rise to public interest concerns in the areas of media plurality, financial stability and national security.

Concerned

"This assessment will be made by the appropriate authorities and the conclusion set out in due course."

The Defence Secretary Gavin Williamson is said to be concerned about the deal.

Sir Gerald Howarth, formerly in charge of international security strategy, has said that the government is right to be sceptical about the takeover.

He said: "Gavin Williamson is absolutely right to oppose the Melrose acquisition of GKN Aerospace unless cast-iron assurances are given that Melrose will maintain the business and invest in new aerospace technology and that they will not seek to dispose of the business without prior approval from the Ministry of Defence."

The GMB union has added its voice to the chorus of those opposed to the takeover with Ross Murdoch, the organisation's national officer calling directly on Mr Clark to intervene.

He said: "Allowing the short term gain of speculators to influence the future of one of Britain's oldest engineering firms sends out a harsh message to GKN employees: profits come before their job security.

"Greg Clark must stop this deal before it damages the UK economy further."

A decision on whether to block the takeover is expected to be taken in the next few weeks.