LONDON (Alliance News) - The UK government has sought several commitments from Melrose Industries PLC over its GBP8.4 billion hostile takeover bid for British engineering company GKN PLC, as it evaluates whether the bid gives rise to national security concerns.
The UK Secretary of State for Business, Energy & Industrial Strategy Greg Clark in a letter dated Monday sought binding commitments from Melrose, if its bid for GKN was successful, over operating a UK headquartered and listed business, maintaining a UK workforce, continuing to pay UK taxes, continuing to invest in research and development programmes and making arrangements for current and future pensioners.
"I am concerned that a short-term approach to ownership may not be compatible with maintaining the longer-term relationships which characterise the best interests of the defence field. In the light of this I would expect to see a commitment to continuity of ownership and strategic investment specific to the defence related business of GKN and to exclude the option of a short-term sale of this business without the consent of the Government. I am aware that you are separately discussing with the Ministry of Defence the terms of an agreement that would satisfy any concerns that the Defence Secretary may have," Clark said.
Clark's letter to Melrose seeking specific commitments relating to its GKN bid was published on Tuesday.
In response, turnaround specialist Melrose said Tuesday that it has agreed with UK takeover panel legally binding undertakings in relation to maintaining Melrose's headquarters in the UK and a London stock listing for a period of five years. The company also gave commitments over research and development spending of GKN.
Shares in Melrose were trading 0.5% higher at 222.00 pence. GKN shares were trading 1.1% higher at 436.40p.
