Vote Leave donations raise further concern over Melrose's GKN bid

Unite demands to know if Melrose bosses who donated thousands support a hard Brexit


Political efforts to force the business secretary, Greg Clark , to intervene in the hostile takeover bid for industrial giant GKN have intensified with an accusation by Britain’s largest trade union that bosses of bidder Melrose support a hard Brexit that will damage manufacturing jobs.

Research by Unite shows Melrose’s executive chair, Christopher Miller, and his wife, Monica, donated £37,500 to Vote Leave in the runup to the EU referendum while the vice-chair, David Roper, donated £20,000 – a pro-leave stance that the union says justifies blocking the£7.4bn deal unveiled last month.

Steve Turner, Unite’s assistant general secretary, said GKN’s employees were reliant on “tariff-free, frictionless trade” but the donations meant “workers will want to know whether Melrose’s bosses support a hard Brexit which could damage GKN’s business and destroy jobs”.

GKN employs 6,000 of its 58,000-strong workforce in the UK. Of these, 3,000 employees predominantly help manufacture Airbus wings in the Bristol area, while a further 1,800 supply the car industry from a plant in Redditch, south of Birmingham.

Last week it emerged that Miller and Roper are also sizeable donors to the Conservative party, with the former (who donates under the name James Christopher) having given at least £40,492 and the latter at least £131,375. But Melrose said the political donations were a matter for the two individuals, and that the company itself did not donate to any political party.

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A Labour and a Conservative MP are also coordinating a letter of protest to be signed by Commons colleagues whose constituencies contain GKN sites. Employees are also preparing to lobby parliament on Wednesday to demonstrate their opposition to the bid.

Jack Dromey, the Labour MP for Birmingham Erdington, is coordinating the letter with Conservative Rachel Maclean, who represents Redditch. He said: “GKN is a good company, a good employer. Melrose is an asset-stripper. For a company like GKN to fall prey to a company like Melrose would make a mockery of the idea of an industrial strategy in Britain.”

Melrose rejects the characterisation that it is an asset-stripper, describing its strategy as one where it acquires underperforming engineering companies and aims “to double shareholders’ investments over a three to five year time scale” by restructuring them and selling them on. In an interview on Sunday, the chief executive of Melrose, Simon Peckham, said: “We are not asset-strippers, we are renovators and improvers. We don’t load businesses with debt. We don’t own businesses for ever, we do sell and give the money back to shareholders, then we do it again.”

The GKN row has rapidly become a test case for government’s willingness to intervene as part of an emerging UK industrial strategy. Clark’s business department is examining if it can call a public interest inquiry. But the only legal grounds for doing so are national interest, which applies to defence contractors, or financial stability, which is intended to apply to banks.

Last week, Gavin Williamson, the defence secretary, wrote to Clark expressing his concern over the deal because GKN supplies parts for the F-35 fighter jet, the A400M military transport aircraft, and the Ajax armoured vehicle that is used by the British Army.

However, the bidder is understood to believe the legal grounds for Clark to become involved are thin. Melrose argues that GKN is not amongst the 100 largest suppliers of defence equipment for the MoD, and given that both are British companies, the question of national security should not arise.

GKN releases full-year results on Tuesday, at a crucial point in the bid battle. Some believe this could be a point where Melrose sweetens its mostly paper bid to win a board recommendation, although with GKN share price of 426.5p roughly tracking the bid price of 419p it is not certain a high offer will be necessary.

GKN has been fighting the takeover on financial value grounds while the political concerns swirl, although company sources have also accused Melrose of operating a short-term approach, acting as an industrial conglomerate that aims to sell assets around three years after acquiring them.

Contributor

Dan Sabbagh

The GuardianTramp

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