International Development News
Development News Edition
Give Feedback

UK MPs call for govt to block Melrose's £8bn takeover of tech giant GKN

The group's role in manufacturing military aircraft parts can lead to halt deal on national security grounds.

Devdiscourse News Desk
Updated: 30-03-2018 14:36 IST
UK MPs call for govt to block Melrose's £8bn takeover of tech giant GKN

Britain's 269 year old firm GKN was taken over by Melrose by a voting on Thursday. (Image credits: Wikimedia Commons)

United Kingdom's engineering firm GKN is to be taken over by Melrose, a company that has been labeled an "asset-stripper", initiating calls for the UK government to block the 8.1bBillion Pound deal on grounds of national security.

GKN, founded in 1759 and has a staff of 59,000 employees including 6,000 in the UK, succumbed to a "hostile" bid from Melrose after a long corporate tussle that has spilled into the political arena.

Melrose, which buys underperforming firms to reduce costs and sell at a profit, whose bids were rejected by the company's board twice appealed directly to GKN shareholders winning their approval at a vote on Thursday afternoon.

Investors' blessing for the takeover signals an end to the independence of one of the country's oldest engineering firm that provided the iron for the construction of Britain's railways and produced Spitfires during the second world war.

Business secretary Greg Clark said he would consider calls from MPs and trade unions to intervene on national security grounds, given GKN's role in making components for military aircraft including the Lockheed F-35B fighter jet.

Jack Dromey, the Labour MP who led a group of 16 politicians that wrote to Clark urging him to halt the deal, said the buyout of GKN by Melrose was a "bleak day for British industry".

The acquisition of GKN, which began life as an ironworks near Merthyr Tydfil in 1759, is the largest hostile takeover in the UK since US firm Kraft bought Cadbury in 2010.

"To let a 259-year-old British engineering icon like GKN be taken over by an asset-stripper like Melrose is a monumental failure by ministers. However, the government still has the power to intervene to block the hostile takeover on defense and national security grounds. It should do so in the British national interest.", said Dromey.

COUNTRY : United Kingdom