GKN

Paul Sweeney Excerpts

Tuesday 24th April 2018 Commons Chamber

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

Takeovers are a good thing where they are likely to enhance value, but it is clear that this highly leveraged takeover by Melrose is likely simply to load GKN with £8 billion of debt. We know what will happen, as we have learned the lessons of history: the company will be broken up and sold off piecemeal to recoup the debt raised by Melrose to create false value.

We have also seen a lukewarm commitment on R&D. GKN’s current R&D is at only half to two thirds that of its main competitors. Why did the Minister not seek a more ambitious undertaking that the takeover will enhance value and increase GKN’s R&D spending target to that of its main international competitors? I echo the sentiments of other Members on the need to amend our shareholder takeover rules to ensure that short-term interests of people with no industrial knowledge or understanding of companies are not permitted to distort the interest of stakeholders in the long-term value of this company.

[Greg Clark]

For the first time in British corporate history, we have secured a commitment to spend, as a minimum, what the incumbent is already spending on research and development—that should be welcomed. Obviously, the reports of accounts and the disclosures that will need to be made to the markets will shine a light on the debt, but it is striking that it has been suggested today that £150 million was accounted for by unpaid suppliers’ bills at the end of the last quarter—I gather that is in the filings that have been released today—so I imagine the hon. Gentleman will want to study very closely with a beady eye the reports of accounts as they are published in the months ahead.