Category Archives: Defence

Britain, Business, Defence, Government

Acquisition firm seeking to takeover GKN made £28m loss in 2017

MELROSE

THE PREDATORY firm plotting to snap up British defence giant GKN suffered a £28million loss last year.

Financial results for turnaround company Melrose also showed it has presided over factory closures and hundreds of job cuts.

Its annual loss for 2017 was fuelled by problems with power generation firm Brush, which it took over and acquired a decade earlier.

The loss-making figures will add to questions about Melrose’s suitability to own GKN, a key supplier to defence and aerospace industries with more than £9billion in sales.

Melrose has made a £7.4billion offer for GKN, which has some 58,000 employees worldwide including 6,000 in the UK, and makes key parts for fighter jets, airplanes and motor vehicles.

But the bid has been rejected by the board of GKN as being “cheap and opportunistic”, triggering the biggest hostile takeover battle in a decade and calls for the UK Government to intervene.

Alex Chisholm, permanent secretary for the business department, has been quizzed about the bid by the Commons business committee.

Defence Secretary Gavin Williamson is also under pressure in answering questions from the defence committee. GKN has significant stakes in military projects and supply chains.

Melrose insists it remains well-placed to push ahead with its offer. Chairman Christopher Miller said: “Substantial long-term value is being created with significant investment in new technology, new products and operations.” The financial woes at Melrose stem from a takeover of engineering group FKI in 2008, which included buying Brush.

Melrose has also disclosed that it was writing-off £144.7million in value from this division, including £31.1million on the closure of its factory in Changshu, China. Melrose said Brush’s generator sales fell 43 per cent last year.

The results revealed that up to 270 jobs are at risk at Brush’s production factory in Loughborough. It is also closing its facility in Ridderderk, Netherlands, and shifting work to the Czech Republic.

Elsewhere, Melrose closed loss-making operations in the heating and ventilation division of Nortek, the US manufacturer it bought in 2016.

A spokesperson for Melrose said: “Brush remains a fine business which we are happy to support … The real number investors will focus on is the dramatic increase in underlying profits and the near doubling of the dividend, which reflects our confidence in the progress being made at Nortek.”

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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, Defence, Government, NATO

RAF Typhoon jets to patrol airspace over the Black Sea

NATO

Typhoon3

Four Typhoon fighter jets are being sent to Romania in May to counter the threat from Russia over the Black Sea.

Four RAF Typhoons are being sent to Romania to help police airspace around the Black Sea and provide reassurance to countries worried about Russia’s military ambitions.

Defence Secretary Sir Michael Fallon confirmed jets from 3 (Fighter) Squadron at RAF Coningsby in Lincolnshire would spend up to four months in the country from May.

They will be based at Mihail Kogalniceanu airbase in southeastern Romania and patrol the Black Sea alongside local warplanes.

The 1,370mph aircraft will help detect, track and identify objects approaching or operating within NATO airspace.

The deployment is part of the alliance’s southern air policing mission and was first announced last year – but details of the date and squadron have only just been officially revealed.

Speaking in Whitehall, Sir Michael said: “The UK is stepping up its support for NATO’s collective defence from the north to the south of the alliance.

“With this deployment, RAF planes will be ready to secure NATO airspace and provide reassurance to our allies in the Black Sea region.”

Romania, Bulgaria and Turkey – all members of the alliance – border the Black Sea, along with Russia and Russian-annexed Crimea.

Sir Michael told the Commons defence committee last year that the deployment was motivated by factors including the increasing militarisation of Crimea and insurgency activity.

RAF Typhoons have also contributed to NATO’s mission over Baltic countries since the start of the Crimea crisis in 2014, flying missions out of Estonia and Lithuania.

UK and NATO aircraft intercepted unidentified Russian planes more than 400 times in 2014 alone.

British troops were also recently sent to Estonia (see article) as part of a NATO operation, with the defence secretary saying it was another measure to counter an “increasingly assertive Russia”.

  • Appendage
Black_Sea_map

Black Sea regional map.

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