Spy chiefs at MI5 and MI6 to have say over GKN takeover

It is believed MI5 and MI6 will be able to raise any concerns about the sale as part of a wide-ranging government probe into whether the deal should be blocked on national security concerns.

Defence Secretary Gavin Williamson has already questioned the takeover of the engineering giant, which makes parts for fighter jets, bombers and military cargo planes.

GKN has a site in Telford where it employs almost 400 people, as well as other factories in the Midlands with around 1,000 workers.

The government review of the deal comes after considerable pressure on Business Secretary Greg Clark to block the takeover by Melrose.

The firm is seeking approval from security authorities in the US, France and Germany for its bid, which is due to be finalised next Friday.

Labour MP Jack Dromey, who has been campaigning against the buyout, said: "If British security sources are concerned over the Melrose bid that makes it all the more important that Greg Clark should call in the takeover.

"There can be no question of Melrose doing anything without the defence and security implications being seriously examined."

Mr Clark has indicated that he has no objection to the deal in principle, saying that no British firm was immune from takeover and shareholders had decided they wanted new management.

Last week it emerged the Ministry of Defence is looking at whether there are grounds to block a takeover of GKN.

Opposed

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.

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.

GKN is not listed as one of the Ministry of Defence's top 50 suppliers. But it makes components for the Eurofighter Typhoon fighter jet (made by BAE and Airbus) and the A400M military aircraft (made by Airbus).

GKN's US defence business is much more significant. A US committee is still determining whether to give approval to Melrose to act as a provider to the US military.

Melrose launched its bid in January, initially at £7bn. It increased that to £8.1bn, with up to another £1bn to support the pension fund.

It argued that it could increase GKN's profitability, which has been falling steadily over the last five years.

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