Melrose deal is likely to have a ‘detrimental impact’ on GKN’s pension fund
A group of 16 MPs has written to the Business Secretary Greg Clark urging him that the proposed takeover of UK engineering giant GKN by turnaround specialist Melrose should be blocked.
The development comes just days after GKN announced that it is in talks with a US firm over a potential merger of its automotive business.
The letter from the cross-party group of MPs, led by Labour MP Jack Dromey and Conservative MP Rachel Maclean, states: “GKN is one of the most prominent engineering firms in the UK, the third biggest in our country. It is a world class success story, the pride of British industry which supplies components to companies such as Jaguar Land Rover.
“We are writing to you because we all have a GKN plant and/or supply chain-affected firm in our constituencies. Due to this, we have shared our concerns about the proposed hostile takeover bid by Melrose and want to express to you why we believe the takeover should not succeed.”
Meanwhile the Pensions Regulator has also warned that the £7.4bn hostile offer for GKN could have a detrimental impact on the engineering giant’s pensions scheme. The pensions watchdog said the levels of debt involved in the deal raised concerns about whether the Melrose would be able to service GKN’s £700m pension deficit.
“A takeover of GKN by Melrose is highly likely to mean the break-up of GKN, and the selling on – and possible disappearance – of several of its constituent important components including its aerospace, driveline, powder metallurgy and additive divisions,” the letter added.