Chair of influential cross-party business committee has "serious concerns" about Melrose's hostile bid for GKN

 
Lucy White
Labour Party Conference - Day One
Rachel Reeves wants the government to consider more grounds for intervention (Source: Getty)

Rachel Reeves, the Labour MP who heads an influential cross-party business committee, has this morning voiced her "serious concerns" about Melrose's hostile bid for engineering giant GKN.

In a letter to business secretary Greg Clark, Reeves – chair of the Business, Energy and Industrial Strategy (Beis) Select Committee – said that Melrose's £7.4bn bid "raises serious concerns about protections for our vital industries, not least for our industrial strategy, which requires high-skilled jobs in engineering, science and research".

Currently the government can intervene in takeovers on the grounds of national security, financial stability or media plurality. The government is already understood to be scrutinising the deal on the grounds of national security, since GKN engineers parts for a number of military aircraft.

Read more: Government turns up the scrutiny on Melrose's £7.4bn hostile bid for engineering giant GKN

In Prime Minister's Questions yesterday, Theresa May said she would "act in the national interest".

But in the letter, dated yesterday, Reeves asked Clark to consider widening the grounds on which the government could intervene.

"In other countries, such as Germany, I understand that the law requires a qualified majority of 75 per cent of votes cast for certain actions associated with a hostile takeover," she wrote.

Reeves also raised the possibility of introducing a minimum time threshold for which a shareholder must have been invested in the company before being allowed to vote on takeovers.

Read more: GKN hits back at Melrose's "misleading" £7.4bn offer

"In the light of the Kraft takeover of Cadbury in 2010, do you agree that there is a case for revisiting the rules in order to strengthen requirements relating to the fulfilment of undertakings made as part of the acquisition process?" she wrote to Clark.

Reeves told the business secretary that she wanted more clarification on whether the government would be able to use national security reasons to intervene, and whether the government was considering any other options.

Read more: GKN warns pension schemes could be threatened by Melrose's £7.4bn hostile bid

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