Westland sale leaves GKN vulnerable to bid

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The Independent Online

The automotive and aerospace supplier GKN could be vulnerable to a foreign takeover bid after the formal announcement yesterday of the £1bn sale of its half stake in the helicopter joint venture AgustaWestland.

The automotive and aerospace supplier GKN could be vulnerable to a foreign takeover bid after the formal announcement yesterday of the £1bn sale of its half stake in the helicopter joint venture AgustaWestland.

At least three giant overseas automotive suppliers including Visteon and Delphi of the US and Germany's ThyssenKrupp, are thought to have considered GKN in the past but been put off by its Westland business.

The disposal of the 50 per cent stake in AgustaWestland to GKN's Italian partner Finmeccanica means that it is now predominantly an automotive supplier with 85 per cent of its turnover generated from car manufacturers. Finmeccanica assured the 4,000 UK employees of AgustaWestland that their jobs were safe. It also pledged that Britain's strategic defence interests would not be compromised, saying it intended to develop Westland's manufacturing facilities in the UK.

The sale marks the second time that ownership of Westland has passed outside the UK since Michael Heseltine dramatically resigned as the Secretary of State for Defence in 1986 after a struggle for control of the company.

Kevin Smith, GKN's chief executive, said the group would book a profit of about £700m on the deal. About £300m-£400m is likely to be used to pay down debt and purchase GKN shares while a further £100m will be used to reduce its pension fund deficit, leaving £200m to spend on bolt-on acquisitions of aerospace businesses. However, in a conference call with analysts and investors, Mr Smith ruled out a "large transformational acquisition".

The deal will require regulatory and shareholder approval. Both sides aim to complete the transaction by the end of the year.

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