GKN PLC Share News (GKN)

* Hostile offer by Melrose has been rejected by GKN

* GKN has countered with plan to split the firm

* British engineer involved in U.S., UK defence projects

* Lawmakers fear Melrose may sell GKN units to foreigners(Adds quotes and background to takeover bid)

By Ben Martin

LONDON, March 6 (Reuters) - Melrose Industries willconsider making binding commitments about the future of GKNif it succeeds in its bid to take over the Britishengineering firm, the chief executive of the turnaroundspecialist told lawmakers.

The 7 billion-pound hostile offer for GKN, which suppliescomponents for the Black Hawk helicopter and EurofighterTyphoon, has faced mounting political scrutiny in Britain.

Some lawmakers say jobs and GKN's pension scheme may be atrisk and that Melrose could break up the engineer and sell partsto foreign buyers, potentially compromising British and U.S.national security because of GKN's work on defence programmes.

But Melrose CEO Simon Peckham told British lawmakers onparliament's Business, Energy and Industrial Strategy (BEIS)Committee that Melrose would not seek to offload GKN businessesto a buyer who could be deemed inappropriate.

He said Melrose could make binding commitments, known aspost-offer undertakings (POUs) under Britain's Takeover Code,about its ownership of GKN if its cash-and-shares bid wassuccessful.

"We will look at what POUs can be given at the moment ourbid gets to a stage where that could happen," Peckham said,adding that these pledges could cover areas including researchand development at GKN and maintaining the engineer's brands.

A group of 16 British politicians wrote to Greg Clark, thebusiness minister, on Monday to urge the government to use itspowers to intervene in the Melrose takeover on public interestgrounds, citing potential national security issues.

"We are not going to sell GKN military protected assets toanyone who is not an appropriate buyer," Peckham told the BEIScommittee.

GKN Finance Director Jos Sclater, who also appeared beforethe committee with GKN Chief Executive Anne Stevens, said theBritish engineer's "U.S. military presence is a lot moresignificant than our UK presence", when pressed about thesecurity implications of a Melrose takeover.

Frank Field, the chair of the parliamentary work andpensions committee, has urged Melrose to seek clearancevoluntarily from Britain's pension regulator for its GKN bid.

Peckham told the BEIS committee that Melrose would seekfresh legal advice on the matter.

The turnaround specialist has been asked to report back tothe lawmakers on its efforts to secure a greenlight from thepensions regulator and to update the committee on the areaswhere it might offer POUs.

GKN has sought to fend off Melrose's unwanted approach byoutlining its own plan to split its main aerospace andautomotive parts divisions into two separate companies, and tosell off its powder metallurgy unit.

This has spurred approaches from other firms interested inGKN's businesses including U.S. group Dana, which isdiscussing a potential tie-up with the British engineer's autosdivision.

GKN's chief executive declined to tell the BEIS committeewhen the discussions with Dana started but did confirm that theBritish engineer had received "many" approaches and held "many"conversations.(Reporting by Ben MartinEditing by Jason Neely and Edmund Blair)