LONDON (Reuters) – An influential British lawmaker demanded more detailed commitments from Melrose Industries (MRON.L) on Wednesday on the future of investment and jobs at GKN (GKN.L) if it succeeds in a hostile takeover of the British engineering firm.
Melrose Chief Executive Simon Peckham wrote to a parliamentary committee setting out areas where the industrial turnaround specialist intends to make so-called post-offer undertakings (POUs), which are legally binding under Britain’s takeover rules, if its 8.1 billion pound ($11.3 billion) bid is successful.
These included an intention to keep GKN headquartered in Britain and to maintain at least the levels of research and development investment made by GKN between 2014 and 2016.
But Rachel Reeves, chair of the Business, Energy and Industrial Strategy (BEIS) Committee, said Melrose had not given enough detail of its pledges for the British aerospace and automotive parts supplier.
“Melrose have given a sense of the likely direction of their post-offer undertakings but there is a still a lack of detail in their commitments on investment and jobs and these currently fall short of being legally enforceable,” Reeves said.
“Workers at GKN deserve more detail from both Melrose and the management team at GKN about what future lies in store for their jobs and for long-term investment in the UK operations of the company,” said Reeves, from the opposition Labour Party.
Members of the parliamentary committee had last week asked Melrose executives to outline in writing the legally enforceable pledges they were prepared to make on GKN, amid political concern about jobs, pensions and research and development investment at the bid target.
Melrose’s bid for GKN, a supplier of parts to the Eurofighter Typhoon, has come under political scrutiny in Britain, with some lawmakers voicing worries that a takeover by Melrose could risk national security.
This is because Melrose sells on businesses once it has improved their performance and there are concerns the GKN units involved in defence could fall into foreign ownership.
GKN is trying to fight off the Melrose takeover and as part of its defence has struck a deal to merge its automotive division with U.S. firm Dana. Shareholders in GKN have until March 29 to accept Melrose’s bid.
Peckham said the contents of his letter were “initial details” and that Melrose would need to agree the form of any POUs with the UK Takeover Panel.
British lawmakers have also pressed Melrose to voluntarily seek clearance from the pensions regulator for its GKN bid.
In a separate letter, Peckham said that Melrose could not apply to the regulator before it has reached an agreement with the GKN pension trustees about its plan for the engineer’s retirement schemes.
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Reporting by Ben Martin; editing by Jason Neely and Adrian Croft