GKN, the British engineering firm, has been sold under a wave of controversy to investment firm Melrose Industries. GKN is one of the oldest engineering businesses in the UK and its £8.1bn sale means the firm has lost its fight to remain independent.
Melrose Industries exists to transform struggling manufacturing businesses and to sell them on profitably. Its bid won the support of the necessary 52 per cent majority of GKN shareholders.
Greg Clark, the business secretary, said that Melrose would now be obliged to remain based in the UK. Many critics were scathing of the news, saying that Melrose is little more than an asset stripper with short-term principles.
The GKN management team has said that it will now work with the buyer to ensure the changing business is a success. GKN employs 6,000 people in the UK and 58,000 around the world. The board had said that it would dispose of its car parts business and seek to overhaul its core operations to become profitable again; however, investors were keen on the Melrose bid.
Melrose chairman Christopher Miller said he was pleased that the company’s shareholders had seen the value in the investment firm’s bid to create a new British powerhouse with an exciting future.
GKN makes everything from cars to aerospace technologies and is a key supplier to the American military. It is also a leading partner in joint defence programmes in which Britain has a stake, such as the F-35 aircraft.
Melrose says it plans to keep the firm in one piece as it focuses on ensuring that each division reaches its full potential before it seeks to realise the true value of the company. The government is now reviewing the proposed merger to assess whether there is any conflict in public interest on the grounds of financial stability, media plurality or additional security.
There is no doubt that the news comes as a blow to the UK industrial sector; however, smaller businesses are still enjoying success with scope to grow and compete on the global www. Growing certainty around the Brexit transition plan has seen businesses beginning to invest in their operation once again, with Century Business Finance seeing an upturn in business loan applications to support these plans for success.
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