On the face of it, the battle over U.K. industrial giant GKN appears to be over with turnaround specialist Melrose winning the day with a pound symbol £8.1B commitment. But the U.K. government wants to have have a peek first before it gives its blessing.
Unions want the deal to be blocked on national security grounds.
While the interest of the automotive industry by Dana was for that segment of the GKN business, the aerospace segment of the engineering firm has a critical role within the U.K.
Labour called Melrose a “short-termist asset-stripper” and condemned the deal. GKN has current and historical significance for Britain, having lent it’s expertise to build such icons as the Mini and the WWII Spitfire fighter plane.
Melrose Industries,won the backing of 52% of GKN shareholders but only after it promised to keep the company headquarters in the UK, maintain current levels of R&D spending, and to not sell the aerospace business for five years.
Concerns have been expressed that Melrose could sell the aerospace division, which has significant defense contracts, to foreign interests in the future.
The loss to Melrose does leave an acquisition anxious Dana out in the cold.
In a statement, Dana Incorporated cknowledged the decision by a majority of the shareholders of GKN plc to accept the proposal by Melrose Industries plc to acquire GKN. As a consequence, it appears unlikely that the proposed combination with GKN Driveline will proceed.
“We are, of course, disappointed by today’s outcome and continue to believe Dana would be the best owner and operator of GKN Driveline,” said James Kamsickas, Dana president and chief executive officer. “This has always been an opportunity, not a required or critical asset. Dana is a strong, thriving company, and we will continue our focus on the execution of our enterprise strategy, delivering for customers and remaining responsible stewards of our shareholders’ capital.”