By RobMag66 [CC BY-SA 3.0] via Wikimedia Commons
The attempts of GKN to fight off Melrose, its hostile suitor, have been reinforced following the intervention of a senior politician of the United States, who has demanded that the deal is prevented on national security grounds.
A congressman from the United States claims that the track record of Melrose makes it an unsuitable owner of the aerospace and automotive engineer from the United Kingdom and would be a threat to some of the highly sensitive military projects that it is involved in in the United States.
Congressman Neal Dunn, writing to the Committee on Foreign Investment in the United States, said that GKN is a vital supplier to secret programmes for the US air force, as well as aircraft which include F-18 and the F-35 fighters, and Blackhawk and Chinook helicopters.
The strategy of Melrose to “buy, sell, improve” within three to five years places these programmes at risk, stated Dunn, a congressman in Florida where GKN has a top-secret facility.
Mr Dunn wrote: “Melrose has no track record in defence contracting or relevant high-technology businesses.” He added that the acquisition plan of Melrose exposed “prioritisation of operating cash generation.”
Once the said deal was allowed, the congressman stated, “Melrose’s strategy will undermine long-term investments in R&D and secure supply chains, which are critical to major defence platforms GKN supplies.”
The news comes as GKN plans to step up its attack on Melrose this week, accusing the latter of starving companies of investment and over-reliance on cost-cuts.
Under the rules of the Takeover Panel, the FTSE 100 engineer is required to publish the defence document of the company by Thursday.
It is anticipated to single out the stewardship of Melrose of the Brush turbogenerator business that it acquired approximately a decade ago. GKN aims to highlight 300 job cuts that were recently announced at Brush, saying that 75pc of its employees have been shed under the ownership of Melrose. City figures say that the attack may also blame the losses at the main Loughborough plant of Brush on the failure of Melrose to invest and prepare it for shifts in the turbogenerator market.
Anne Stevens, the boss of GKN, is expected to contrast this with the long-term approach of GKN, investing for the future at the expense of short-term profit.