Melrose receives US and Canadian clearance for hostile GKN bid

Turnaround specialist Melrose Industries said on Monday that its £7.4bn hostile bid for engineer GKN has received clearance from US and Canadian authorities.

The Federal Trade Commission has granted early termination of the applicable waiting period under the Hart Scott Rodino Act, while in Canada, the Competition Bureau has confirmed the completion of its review and effective clearance of the deal.

However, Melrose - which is due to report full-year results on Thursday - will still need to get approval from the Committee on Foreign Investment in the US as GKN is a supplier of components to the US and British military.

GKN has been engaged in a bitter battle with Melrose since it made its hostile approach to the company back in January, dismissing the bid as "derisory" and saying it fundamentally undervalues the group and its prospects.

Chief executive Anne Stevens accused Melrose of trying to buy GKN "on the cheap" just at the point when the engineer is starting to reap the benefits of its long-term investments.

On Wednesday, GKN workers will take to the streets outside Westminster to lobby MPs and demand that the government stop Melrose's bid.

Union Unite said that the workers from the South West, West Midlands and South of England believe a takeover by Melrose could lead to the company being sold off piecemeal and jobs cut or shipped abroad.

Unite's assistant general secretary for Aerospace, Steve Turner, said: "There is mounting concern across political parties and business over Melrose’s debt-laden bid and the risk it poses to UK jobs and defence interests.

"GKN will be saddled with over £1.3bn of debt if Melrose succeeds with its bid, while its advisors will pocket upwards of £140m in fees. This is a deal that would have ‘The Wolf of Wall Street’ licking his lips and leaves workers fearful that they will ultimately pay for this debt-fuelled bonanza with their jobs.

"Technology and jobs risk being shipped abroad and because of GKN’s defence work our national security is at risk. The message from our members is clear. Theresa May’s government must use its power to block the bid to protect jobs, communities and our national security."

Unite is urging the secretary of state for business Greg Clark to use his powers under the Enterprise Act (2002) to block Melrose’s bid in the public interest.

At 1250 GMT, Melrose shares were up 0.1% to 227.10p and GKN was 1.2% higher at 431.50p.