Government gives green light to £8.1bn GKN takeover

The Government has given the green light to Melrose (LSE: 136541.L - news) 's £8.1bn takeover of British engineering giant GKN (Frankfurt: 694194 - news) after finding there were no national security grounds for intervening in the deal.

Takeover specialist Melrose won shareholder backing for its bitterly contested bid last month despite fears it could take an axe to jobs at the company, which makes components for leading car and aircraft manufacturers.

At the time, Business Secretary Greg Clark said that the Government would formally consider whether the deal raised public interest concerns.

But he told MPs (BSE: MPSLTD.BO - news) on Tuesday that, following fresh assurances from Melrose, he would not intervene - though Labour said these were not enough to secure GKN's long-term future.

Ministers have acknowledged the importance of GKN to the British economy. Its roots date back to the Industrial Revolution, and it employs 6,000 people in the UK.

During the bid process, Mr Clark secured assurances on the future ownership of parts of the company as well as research and development spending.

In his latest statement, he said there had been further commitments about those parts of the business considered to be of importance to national security.

He told the Commons that following these, and an assessment by the Ministry of Defence that statutory intervention was not needed, he had decided "that there are not reasonable and proportionate grounds" to do so on the basis of national security.

Mr Clark added: "The new management's stewardship of these important businesses carries with it important responsibilities for our economy and our country.

"I look to the management to honour its commitments both in the spirit and in the letter and to create a strong future for GKN, its employees, suppliers and industrial sectors in which it will play a major role."

Shadow business secretary Rebecca Long-Bailey said the assurances given were "not sufficient" to guarantee the long-term prospects of the company or its workforce.

Earlier on Tuesday, a trading statement from GKN revealed that bosses spent £107m on advisers in their unsuccessful attempt to prevent the takeover.