Downing Street fuelled speculation that the government is considering taking part of Rolls-Royce back into public ownership today when the Prime Minister’s official spokeswoman refused to deny reports about a possible nationalisation.
When asked about a report in the Financial Times that ministers were considering nationalising the nuclear submarine business of the manufacturing giant, the spokeswoman did not rule out such drastic measures, saying only: “Rolls-Royce is a major contributor to our economy. It’s an important supplier to the government. We will continue to work closely with them.”
Government and industry sources, however, told City A.M. that while nationalisation was possible, it remained highly unlikely.
Rolls-Royce, which was state-owned during the 1970s and 1980s before being privatised again in 1987, has struggled in recent months, with four profit warnings in the last year, a plummeting share price, and many investors, including the high-profile fund manager Neil Woodford, exiting their holdings in the business.
The government, meanwhile, has a “golden share” in Rolls-Royce, giving it oversight of multiple strategic decisions at the company. Under the terms of the golden share, the government would have to consent to Rolls-Royce selling more than 25 per cent of either its nuclear business, or the assets of the group as a whole.
A Rolls-Royce spokesperson would not comment directly on nationalisation, but said: “We are in contact with government as a matter of routine and regularly keep them updated on our performance and progress.”