Thank you for contacting me about the proposed takeover of GKN.
As a competitive economy Britain has always had vigorous contests for the management of publicly listed companies. Competition for how a business should best be run drives efficiency and competitiveness, which is important for the economy and stakeholders. Needless to say, there are many concerns about the bid on this long-standing British manufacturing and engineering company.
This is the first major takeover to have taken place in the UK since new changes to the Takeover Code were introduced earlier this year. These give companies subject to a bid more time to prepare their response as well as requiring bidders to make earlier and fuller disclosures of their plans for target companies. Bidding companies who are successful in their takeovers now also have to publish reports on their compliance with the plans they announced during the course of an offer.
I am assured that, following discussions with the Business Secretary and Takeover Panel, Melrose has agreed to honour commitments should their bid be successful. These include binding commitments to maintaining its UK listing and UK headquarters, ensuring that a majority of its directors are resident in the UK and to ensure the Aerospace and Driveline divisions retain the rights to the GKN name. Melrose has committed to maintaining GKN’s current level of research and development investment for the next five years, though I’m not convinced that’s a terribly deep commitment in the long run.
Now that GKN’s shareholders have accepted the terms of the bid, the Government has a statutory responsibility to consider whether the merger in its proposed final form gives rise to public interest concerns in the areas of media plurality, financial stability and national security. This assessment will be made by the appropriate authorities and the conclusion set out in due course.
Thank you again for taking the time to contact me.
EDWARD LEIGH MP