Category Archives: Britain

Britain, Business, Government, Technology, United States

Probity needed over GKN bid

GKN’s TAKEOVER BID

ALL TOO OFTEN it is price which determines the outcome of mergers and takeovers. Share registers are now global and, once the proverbial train has departed, City traders and hedge fund managers hitch calculated risks and profit handsomely.

Notwithstanding, there have been several bid approaches where robust industrial and strategic- defence policies have prevailed. Examples include the proposed Airbus deal with BAE Systems, the Pfizer skirmish with Astrazeneca, the Deutsche Boerse ‘merger of equals’ with the London Stock Exchange, and the approach for Unilever by Kraft-Heinz. The key to shooting down these transactions were robust company boards, and strict regulatory and political responses.

The House of Commons business select committee may be up to its neck picking over the carcass of Carillion, but it would be a dereliction of duty if it now allowed GKN, Britain’s only world-class car components manufacturer, to fall into the hands of financially driven Melrose which has little of the same commitment to British research and development and manufacturing.

The country cannot allow manufacturing know-how to vanish into uncertain hands at the very moment when Britain is looking to new global markets post-Brexit. At least the defence select committee is preparing to ask some serious questions about aerospace.

GKN may not be a top Ministry of Defence contractor, but it does important work on the Typhoon fighter jet and is a strategic partner with the US (including work on the Lockheed Martin F-35 joint-strike fighter destined for Britain’s new aircraft carriers).

In the civilian sector, Airbus regards GKN as a vital supplier for wing components, to the point that the company’s chief executive, Tom Enders, says he would not favour GKN falling into the hands of a financially driven and predatory bidder.

Aerospace, along with pharmaceuticals, finance and high-tech, is a sector of the UK economy where there are industrial clusters and genuine competitive advantage. Allowing that to be whipped away would be enormously detrimental.

The biggest concern about a Melrose takeover is for GKN’s driveline (driveshaft) technology and its advanced work in Abingdon on e-drive, a vital component for next generation electric cars already embraced by manufacturers including Volvo.

The UK car components industry was greatly denuded by the experiences of the late 20th century, but, as the industry has risen phoenix-like from the ashes, GKN emerged as a world-class player willing to invest in the new drive technologies.

It would be an act of industrial sabotage if Melrose were to get its hands on driveline and e-drive and sell the technology to the highest bidders in France, Germany or China. We only have to look at the recent takeover by Vauxhall by Peugeot owners PSA and the threat to the Ellesmere Port plant to understand how ruinous that would be. The Unite union recognises this, and so does an industrialist of the stature of Sir Richard Lapthorne.

The business select committee has a sacred duty to properly scrutinise what the impact of a hostile Melrose deal would be. Allowing the future of GKN to be settled by global investors, with no loyalties to British technology and jobs, would be unconscionable.

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Britain, Business, Defence, Government, National Security, Politics, United States

Defence Secretary to be quizzed by MPs over hostile bid for GKN

TAKEOVER BID OF GKN THREATENS NATIONAL SECURITY

GOVERNMENT ministers face a grilling in the House of Commons this week over the hostile £7.4billion takeover bid for engineering giant GKN.

Theresa May is under pressure to intervene amid mounting concern about the impact the buyout could have on industry and national security.

Redditch-based GKN makes parts for the F-35 Anglo-American fighter jet, the Eurofighter Typhoon and the US’s B-21 stealth bomber, as well as car parts such as driveshafts for the automotive industry.

Its future has been thrown into doubt after the City turnaround group Melrose lodged a £7.4billion offer last month. GKN’s board is attempting to fight the deal. Melrose is known for asset stripping which often leads to large numbers of people losing their jobs through restructuring.

It has emerged that the Defence Secretary Gavin Williamson is set to be questioned about the bid when he appears this week before the defence select committee. Its chairman Julian Lewis said: “The committee have had correspondence strongly against and in favour of the hostile takeover bid and I therefore wouldn’t be surprised if the topic came up [during the committee hearing].”

There is growing concern across Whitehall about the impact this aggressive takeover of GKN would have, especially the long-term defence and security implications it may have for the UK.

The takeover already faces the prospect of wider investigations, with the business, energy and industrial strategy committee expected to scrutinise it further after initial questions were raised by chairman Rachel Reeves.

The Department for Business, Energy and Industrial Strategy is understood to be monitoring the situation closely, and a senior civil servant has been appointed to examine the impact of a takeover.

The US’s own committee on foreign investment will also have to examine any takeover, as will the authorities in France and Germany.

GKN dates back nearly 260 years and made cannonballs for the British Army during the Napoleonic Wars.

It now has around 6,000 employees in the UK among 58,000 worldwide. It is a key supplier to aerospace firms including Airbus, with bases in towns including Redditch, Luton and Telford.

Melrose specialises in buying underperforming firms and selling them on at a profit within three to five years. Liberal Democrat leader Sir Vince Cable has urged the Government to block the bid for GKN, calling Melrose an “utterly unsuitable owner”.

Speaking in the Commons earlier this month, the Prime Minister said: “Of course the Business Department will be looking closely at, and has been following closely, the issue. I and the Government as a whole will always act in the UK national interest.”

Concern about a GKN takeover has also been raised in the United States, where Congressman Neal Dunn has written to the committee on foreign investment urging it to block the bid.

He said: “In addition to concerns over who may ultimately acquire GKN, Melrose’s business strategy will undermine long-term investments in research and development and secure supply chains, which are critical to the major defence platforms GKN currently supplies.”

Any takeover would have to be considered by Germany’s federal ministry of economic affairs and energy and the French ministry of economy, according to documents made available by Melrose.

Melrose’s executive officers say that they “welcome any and all opportunities to explain to government why we [Melrose] believe a merger with GKN will create an industrial powerhouse of which the UK can be rightly proud”.

They added: “Melrose builds businesses to long-term health and prosperity and has an impeccable pension track record.”

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Britain, Foreign Affairs, France, Government, Politics, Russia, Syria, Ukraine

UK blames Russia for ‘huge cyber-attack’

SECURITY

War of words: The Defence Secretary, Gavin Williamson

BRITAIN has publicly blamed the Russian government for a “reckless and destructive” cyber-attack.

In an extraordinary move likely to spark a diplomatic storm, the Foreign Office accused the Kremlin of “malicious cyber activity”.

The attack, which occurred last year, targeted Ukraine and spread across Europe. Its primary targets were the Ukrainian financial, energy and government sectors.

But it was designed to spread further and affected other European and Russian firms in June.

Defence Secretary Gavin Williamson accused Vladimir Putin of “ripping up the rule book”.

Mr Williamson said: “We have entered a new era of warfare, witnessing a destructive and deadly mix of conventional military might and malicious cyber-attacks.

“Russia is ripping up the rule book by undermining democracy, wrecking livelihoods by targeting critical infrastructure, and weaponising information. We must be primed and ready to tackle these stark and intensifying threats.” Ukraine has been locked in a simmering conflict with Russia-backed separatists since Moscow annexed Crimea in 2014.

Foreign minister for cyber-security Lord Ahmad of Wimbledon said the UK’s decision to identify the Kremlin as responsible for the attack underlines the fact the Government will not tolerate “malicious cyber-activity”.

He said: “The UK Government judges that the Russian government, specifically the Russian military, was responsible for the destructive Not-Petya cyber-attack of June 2017.

“The attack showed a continued disregard for Ukrainian sovereignty. Its reckless release disrupted organisations across Europe costing hundreds of millions of pounds.”

He added: “The Kremlin has positioned Russia in direct opposition to the West, yet it doesn’t have to be that way. We call on Russia to be the responsible member of the international community it claims to be rather than secretly trying to undermine it.

“The United Kingdom is identifying, pursuing and responding to malicious cyber-activity regardless of where it originates, imposing costs on those who would seek to do us harm.

“We are committed to strengthening, co-ordinated international efforts to uphold a free, open, peaceful and secure cyberspace.”

His comments point to UK intelligence agencies discovering evidence indicating the involvement of the Russian military.

Meanwhile, the Defence Secretary has risked igniting a diplomatic firestorm by claiming there is no point in Britain listening to Emmanuel Macron.

Mr Williamson has taken aim at the French president amid growing concerns in London at his hard-line position on Brexit.

He spoke out after Mr Macron threatened to launch strikes on the Syrian government for allegedly using chemical weapons against civilians. Mr Williamson, who has been tipped as a potential future Prime Minister, said the UK felt no need to “copy” decisions in neighbouring countries.

“What is the point in listening to French politicians,” he said. “We have our own foreign policy, we don’t need to copy.”

He said he would “dutifully study” Mr Macron’s comments but refused to be drawn on a change in the UK’s policy.

The UK refused to join retaliatory strikes launched by Donald Trump in Syria last year over suspected chemical weapons use. Former defence secretary Sir Michael Fallon later said Britain would support similar actions if “legal, proportionate and necessary”.

Mr Williamson’s dismissal of Mr Macron, during a ministerial meeting at NATO’s Brussels headquarters, will stoke fears that ties between Paris and London are under increasing strain.

Mr Macron threatened a major escalation in Syria this week by threatening to launch air strikes against president Bashar al-Assad’s government.

The warning followed claims that Syrian government forces dropped a chlorine bomb from a helicopter on Saraqeb, a rebel-held town, earlier this month.

The Syrian Government has denied the accusations, while Mr Macron said that French officials had yet to find enough evidence to launch a strike.

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