Engineering giant GKN’s shareholders have approved a hostile takeover bid from ‘turnaround specialist’ Melrose this afternoon (March 29).
Investors approved the takeover by a slim margin – just over half of GKN investors had to vote in favour of the deal for it to go through, and in the end investors owning 52.4 per cent of GKN shares approved the takeover.
Unite has argued that the takeover is far from being a done deal and has vowed to continue fighting it. The Committee on Foreign Investment in the United States (CFIUS) has yet to approve the takeover and Unite has emphasised that business secretary Greg Clark is likewise still well within his powers to stop the takeover on national security grounds.
If GKN does ultimately fall to Melrose, Unite assistant general secretary Steve Turner has said the union “will be holding Melrose’s ‘feet to the fire’ over concessions it has made in recent days and seeking concrete guarantees on job security, investment and future work in the UK.”
But, Turner said, the deal is far from being signed, sealed and delivered.
“National security concerns remain not just for the UK, but for the US too, where the Committee on Foreign Investment in the United States is yet to approve the takeover and to whom Unite has made representations,” he said.
“With the UK defence secretary Gavin Williamson having expressed concern over the takeover’s impact on UK defence interests, we continue to urge business secretary Greg Clark to use his powers under the Enterprise Act and call it in on national defence grounds.
Shadow business secretary Rebecca Long-Bailey agreed as she slammed the government over a half-hearted intervention in the 11th hour, just two days before the shareholder vote deadline today.
“The government acted too little, too late,” she said. “They could have intervened to stop this takeover, and they did not. As such, they have allowed a takeover to happen which may harm both our national security and industrial strategy.
“Labour would have used its powers to stop this bid and look at ways of broadening the public interest test to stop short-term predatory takeovers that may do severe harm to our economy.”
Turner said the takeover “puts into stark relief the inadequacy of the UK’s takeover rules which put the interests of short-term speculators over those of the workforce and long-term investors.”
Unite has long fought hostile takeovers of UK businesses, including Kraft’s takeover of Cadbury, as well as Pfizer’s failed takeover of AstraZeneca and Kraft Heinz’s attempted takeover of Unilever which was likewise seen off. Unilever has since decided to relocate its headquarters in the Netherlands, where takeover laws are much stronger.
UK takeover laws must change
Ultimately, Turner argued, UK takeover laws must change.
“We need an overhaul of UK takeover laws to strengthen the voice of stakeholders to ensure other British companies do not fall prey to corporate vultures looking to make a quick buck against the national interest,” he said.
Unite assistant general secretary for manufacturing Tony Burke called today’s news “deeply disappointing”.
“Shareholders, by the slimmest of margins, have put making a quick profit ahead of the long-term future of one of the UK’s most successful engineering companies,” he said.
“We have deep concern about Melrose’s short-term approach, which we believe could see the piecemeal break-up of GKN and undermine hopes of a coherent industrial strategy for the UK.
“Unite remains of the view that the concessions Melrose has given are inadequate and that question marks remain over whether they are enforceable. The onus is now on the business secretary Greg Clark to go further and step in,” Burke added.
“The government is on notice that these unwanted and corporate raids must come to an end. The Melrose bid for GKN was not about what is good for UK manufacturing; it is about making a quick buck. The UK takeover laws need to reflect the views of the workforce and other stakeholders and should not allow a government minister to stand aside until the last minute and claim they cannot comment or cannot have a view.
“Melrose has work to do if it is to gain the trust and confidence of the GKN workforce,” he went on to say. “Over the coming days Unite will be seeking meetings with Melrose and consulting with our reps in GKN to hear their views and the views of members on the next steps.”
Unite GKN representatives will be meeting in the coming week to discuss the union’s next steps – stay tuned on UNITElive as the story develops next week.