Category Archives: Government

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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Donald Trump, Foreign Affairs, Government, Russia, United States

13 Russians charged with meddling in US election

UNITED STATES

A 37-page indictment filed by the special counsel Robert Mueller names 13 individuals indicted on conspiracy and election fraud charges.

THIRTEEN Russians have now been charged with meddling in the 2016 US presidential election.

They used fake Twitter and Facebook accounts, prosecutors said, as they revealed the extent of Russia’s interference aimed at destabilising American democracy.

Three Russian companies have also been indicted by a federal grand jury in Washington for being part of a campaign run by Yevgeny Prigozhin, a close ally of Vladimir Putin.

The companies include the Internet Research Agency, which runs a troll factory based in Putin’s home city of St Petersburg.

The breath-taking claims of meddling in the 2016 election have been revealed by US prosecutors for the first time, exposing an alleged multimillion-dollar conspiracy which employed hundreds of people.

US deputy attorney general Rod Rosenstien said the federal grand jury indictment exposed a campaign of “information warfare”.

He described how the Russians sought to sow discord in America both before and after President Trump’s election.

By mid-2016 the campaign was spreading disinformation about the Democratic White House candidate Hillary Clinton and supporting Republican Donald Trump.

In other mischief, shortly after the election the Russians were responsible for organising two protests – one in support of Mr Trump and one against – on the same day in New York.

Posing as Americans – in some cases using stolen identities of real US citizens – the alleged conspirators sought to interfere “with the political and electoral processes, including the presidential election of 2016”. A 37-page indictment filed by the special counsel Robert Mueller named 13 individuals, believed still to be in Russia, and three companies for alleged interference from 2014 onwards. According to the indictment, they had a ‘strategic goal to sow discord in the US political system’. An unnamed Texas-based American political operative is said to have instructed them to focus on so-called ‘purple states’ which swing between Republican and Democratic control.

‘Defendants posted derogatory information about a number of candidates and, by early to mid-2016, defendants’ operations included supporting the presidential campaign of then-candidate Donald J Trump… and disparaging Hillary Clinton,’ the indictment says.

Hundreds of people were said to be involved in the operation, working in shifts and with a budget of millions of dollars. They allegedly used bogus social media postings on sites such as Facebook, Twitter, YouTube and Instagram.

After it emerged that Facebook was cooperating with Mr Mueller’s inquiry, investigators found some of the Russians discussed how they were covering their tracks, the deputy attorney general has said.

Two of the firms are said to have also held Russian government contracts. Charges on the indictment include conspiracy, wire fraud, bank fraud and aggravated identity theft.

Mr Rosenstein maintains that no evidence exists the Russians’ activities had affected the election result.

 

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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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