This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.bbc.co.uk/news/business-43552985

The article has changed 8 times. There is an RSS feed of changes available.

Version 5 Version 6
Government wades into GKN takeover battle GKN: Greg Clark under fire for 'last minute' Melrose demands
(about 3 hours later)
Business Secretary Greg Clark has written to Melrose demanding "binding" commitments from the turnaround specialist over its £8.1bn bid for GKN. Business Secretary Greg Clark has been criticised for waiting until the "last minute" to seek assurances from Melrose about its proposed takeover of GKN.
He sought "extensive and clear" measures over GKN's workforce, research and development, and pension schemes. He has written to Melrose demanding "binding" commitments for its £8.1bn bid for the UK engineering giant.
Mr Clark also raised concerns over national security given GKN's role in supplying the UK armed forces. Shadow business secretary Rebecca Long-Bailey said Melrose's response to his letter offered "very little certainty and raised even more questions".
She also questioned whether its assurances were "legally enforceable".
Mr Clark has sought "extensive and clear" measures over GKN's workforce, research and development, and pension schemes.
In response, Melrose set out a number of pledges, including not selling GKN's aerospace division for five years.In response, Melrose set out a number of pledges, including not selling GKN's aerospace division for five years.
The turnaround specialist said that for five years it would maintain the company's London listing, maintain its UK headquarters, and ensure research and development (R&D) spending was at least 2.2% of sales.The turnaround specialist said that for five years it would maintain the company's London listing, maintain its UK headquarters, and ensure research and development (R&D) spending was at least 2.2% of sales.
If Melrose's bid succeeded, Mr Clark told MPs that the Ministry of Defence would seek a "legally binding commitment relating to the management of any defence contracts". Labour MP Rachel Reeves, who chairs the Business select committee, also questioned how long Mr Clark had taken to intervene in the proposed takeover.
He told the Commons he would await MoD advice before deciding whether to intervene in the deal on national security grounds. At a hearing on Tuesday, she asked the minister: "Why did it take until three days before shareholders have to vote on this bid for you to write to Melrose to get some assurances, which are frankly pretty limited and it's too late in the day now for you to try and drive a harder bargain?"
Deadline approaching "The secretary of state says that it is still possible to call this in, but this takeover has been hanging over GKN and their employees and their wider stakeholders for more than two and a half months now."
In a statement to the stock market, GKN boss Anne Stevens said: "Melrose is asking shareholders to consider a set of last-minute undertakings which leave considerable uncertainty and do not adequately address the need for long-term shareholder value creation.
"The Melrose offer remains the low-value, high-risk option for shareholders."
GKN makes parts for planemakers Airbus and Boeing, as well as parts for Volkswagen and Ford cars.GKN makes parts for planemakers Airbus and Boeing, as well as parts for Volkswagen and Ford cars.
It is one of the UK's largest industrial firms, employing more than 59,000 people globally - 6,000 of them in the UK.It is one of the UK's largest industrial firms, employing more than 59,000 people globally - 6,000 of them in the UK.
Melrose specialises in buying up industrial companies it believes are undervalued and restructuring them before selling them on. Mr Clark told MPs that he would await Ministry of Defence advice before deciding whether to intervene in the deal on national security grounds.
GKN is involved in a number of major defence projects, including making parts for the F-35 stealth fighter.
If Melrose's bid succeeded, he said the MoD would seek a "legally binding commitment relating to the management of any defence contracts".
GKN shareholders have until midday on Thursday to accept the bid from Melrose, or back GKN's own business plan.GKN shareholders have until midday on Thursday to accept the bid from Melrose, or back GKN's own business plan.
The plan includes combining GKN's automotive unit with US group Dana, leaving GKN to concentrate on its aerospace business.The plan includes combining GKN's automotive unit with US group Dana, leaving GKN to concentrate on its aerospace business.
In his letter to Melrose chief executive Simon Peckham, Mr Clark set out a series of commitments "which would need to be binding" if the company's bid for GKN was successful. Melrose specialises in buying up industrial companies it believes are undervalued and restructuring them before selling them on.
He said GKN should remain operating as a UK business, with its share listing and headquarters staying in the UK. In his letter to Melrose boss Simon Peckham, Mr Clark set out a series of commitments "which would need to be binding" if the company's bid for GKN was successful.
GKN should also maintain its UK workforce and respect existing employment rights. In response, Mr Peckham said Melrose had agreed a number of legally enforceable undertakings with the Takeover Panel to address the government's concerns - including maintaining GKN's UK base and its R&D spending.
In addition, Mr Clark sought commitments over investment in R&D, investment in workforce training, and arrangements for current and future pensioners.
In the area of defence, the business secretary said he would expect "to see a commitment to continuity of ownership and strategic investment".
Also, Melrose should not quickly sell-on the business without the government's consent.
Tensions
Mr Clark said he was "mindful the business model which Melrose operates and its history of acquiring, improving and selling businesses".
"Whilst this approach can have an important and beneficial role to play, tensions could arise between this approach and the need for long-term investment and stability.
He said the public "reasonably" expects that companies which receive public money through contracts or R&D, should take a long-term view.
In response, Mr Peckham said Melrose's proposal was preferable to the "fire-sale being undertaken by the current GKN board".
He said Melrose had agreed a number of legally enforceable undertakings with the Takeover Panel to address the government's concerns - including maintaining GKN's UK base and its spending on R&D.
"To demonstrate the strength of our commitment and ensure that its improvement and investment programme is not unduly interrupted, we are willing to make a legally binding commitment to you ... that, subject to below, Melrose will not sell the aerospace division before 1 April 2023.""To demonstrate the strength of our commitment and ensure that its improvement and investment programme is not unduly interrupted, we are willing to make a legally binding commitment to you ... that, subject to below, Melrose will not sell the aerospace division before 1 April 2023."
This would not prohibit it from floating the aerospace division on the UK stock market, Mr Peckham added.
He also said that if it was approached by a "suitable strategic purchaser" before 1 April 2023, Melrose would seek government approval for the deal.
Analysis: Simon Jack, BBC business editorAnalysis: Simon Jack, BBC business editor
With two days left in which shareholders must decide whether to accept the bid - how many who liked the look of the Melrose bid will think again now that the company has tied its hands more than it may have liked?With two days left in which shareholders must decide whether to accept the bid - how many who liked the look of the Melrose bid will think again now that the company has tied its hands more than it may have liked?
Not many, according to one big shareholder who spoke to the BBC. Certainly, the government thinks that Melrose has a good chance - and wanted to makes its concerns known while it still can.Not many, according to one big shareholder who spoke to the BBC. Certainly, the government thinks that Melrose has a good chance - and wanted to makes its concerns known while it still can.
Whatever happens between now and Thursday, the future of GKN will look very different.Whatever happens between now and Thursday, the future of GKN will look very different.
Investors have until Thursday lunchtime to decide - 50.01% is the level of support needed.Investors have until Thursday lunchtime to decide - 50.01% is the level of support needed.
Read more from Simon here: Read more from Simon here:.