Source: Sharecast
With shareholders due to vote on its £8.1bn offer by 29 March, the turnaround company sought to convince Business Secretary Greg Clark that it was committed to supporting Britain’s industrial base.
GKN has accused Melrose of being an unsuitable owner with a short-term outlook at odds with the long-term commitment required by GKN’s business and customers. The acrimonious takeover battle for the FTSE 100 engineer has become highly political with parliamentary committees, unions and the Labour opposition raising concerns about GKN’s future.
Melrose announced binding five-year commitments with the Takeover Panel to:
- maintain GKN’s UK share listing
- keep its headquarters in Britain
- ensure the majority of GKN directors live in the UK
- retain the GKN name for the company’s aerospace and automotive businesses
- match GKN’s spending on research and development at 2.2% of sales
In his letter to Clark, Melrose’s chief executive, Simon Peckham, made further efforts to reassure the government.
Peckham said Melrose had no set deadline for selling GKN and that he was prepared to make a further binding pledge not to sell the aerospace division for five years. GKN plans to sell its automotive arm to Dana Inc of the US to generate cash for shareholders.
Melrose will also spend £10m over five years to fund up to 150 new apprenticeships and put more investment into GKN’s plant in Abingdon, Oxforshire, to develop electric vehicles. Employees’ rights would be unchanged and the Unite union would be offered a place on Melrose’s skills board.
GKN works on government defence contracts, raising questions of national security if it is taken over. Peckham urged Clark not to intervene on grounds of national security and said Melrose would “execute a deed of undertaking in favour of the Ministry of Defence” to address concerns.
Peckham wrote: “We have been working hard to ensure we are able to be as clear as possible about our ambition and intentions for GKN and to make sure that we act in the best interests of all stakeholders should we acquire the business … We recognise the concerns you have raised with us and have sought to provide further commitments to address these.”