Shareholders must reject debt-fuelled takeover which will destroy British engineering giant, GKN
- Friday 16 February 2018
The bid for ownership of long-standing British engineering firm GKN will be paid for through hefty debts and damaging restructuring that will make the company unstable and unsustainable, according to the country's biggest union, Unite.
The union has set out its fears about the company falling into the hands of acquisition company Melrose in a letter to shareholders posted on the GKN website today (Friday 16 February).
In the letter (text below), Unite urges GKN shareholders to reject the hostile overtures from Melrose, stating that it will sell off aspects of the company and in so doing will damage GKN's status as a global leader in manufacturing innovation.
The union also says that Melrose's promise to put millions into the pension fund must be viewed with caution as this will be paid for through borrowing and job losses.
Unite also reveals that, according to figures produced for the union, Melrose will spend an estimated £83 million pounds, before VAT and tax, in its efforts to acquire the centuries old GKN. This includes £6 million that will be spent on public relations.
Unite assistant general secretary Steve Turner commented: "The sums of money that Melrose is prepared to spend to acquire GKN are astronomical.
“But make no mistake, this won't be Melrose's money they will be spending. Its plan is to load the business with debt to then sack workers and break up the company to pay back their lenders.
"This is the sort of casino capitalism our country can very well do without. It is always people and communities who pay the price for the short-termism of the turnaround merchants.
"We urge GKN shareholders to take a longer view about the business and understand that Melrose will promise the moon but will strip GKN of value for the future."
Unite assistant general secretary for manufacturing Tony Burke added: "To stop this Melrose juggernaut crashing through one of the UK's oldest engineering companies, we will need the government to get off the fence and act.
"This is a test of the government's commitment to make a success of its industrial strategy.
“In GKN, we have a world leader in automotive and aerospace technology where investment, research and development are planned over a time span of 15 to 20 years. In contrast, Melrose is in business for a quick profit and have no long term commitment to the UK manufacturing base.
"The business secretary Greg Clark has the power to intervene on the basis of national security concerns posed by this hostile bid. We would argue that such are the threats to jobs, communities, UK manufacturing and the state that this power to intervene has become a duty to do so."
The Unite letter has been agreed by representatives of the union's members from across all GKN UK sites.
Note to editors:
TEXT OF THE LETTER FROM UNITE TO GKN SHAREHOLDERS
16 February 2018
Unite's letter to Ms A Stevens, Chief Executive GKN.
Dear Ms Stevens
Unite employees’ representatives’ opinion on the Melrose offer on GKN
On 14 February 2018 the Unite employees’ representatives of GKN gathered in London to analyse the hostile takeover offer of Melrose on GKN with the support of their independent adviser.
Further to this meeting and given the available information to date, the employees’ representatives unanimously supported the following opinion.
• Melrose proposal would have significant negative impact on GKN UK employees. Despite the lack of detail of the proposal Melrose have already disclosed potential headcount reduction at the headquarters as well at plant level
• Melrose proposal would result in the sale of strategic assets including Powder Metallurgy. This could weaken the position of GKN as a global leader in innovation
• Melrose is offering to pay an exceptional dividend to shareholders financed by debt. Melrose recognised the risk generated by an “increased indebtedness of the enlarged group. Melrose did not disclose the detail of the financial long-term structure of the Group. The employees’ representatives are concerned that the current assets of GKN could be used as guarantee for the financial debt
• The employees’ representatives have noted the proposal of a £150m cash contribution to the pension scheme. Nevertheless, given the higher level of indebtedness, the expected disposal of significant parts of the group, they would expect more clarity in relation to the sustainability of the pension scheme
• The required regulatory process, notably in the US, France and Germany, could result in significant changes in the structures of the Group and guarantees given to governments that could finally impact the workforce in the UK.
Based on these facts the Unite employees’ representatives have decided to express their opposition to the Melrose bid and would urge shareholders to reject the offer.
For more information please contact Unite director of communications Pauline Doyle on 07976 832861 and/or Unite senior communications officer Shaun Noble on 020 3371 2060 or 07768 693940. Unite press office is on: 020 3371 2065
Twitter: @unitetheunion Facebook: unitetheunion1
Unite is Britain and Ireland’s largest trade union with over 1.4 million members working across all sectors of the economy. The general secretary is Len McCluskey.