Mayor of Greater Manchester Andy Burnham has been urged to block the sale of a key British supplier to the Royal Navy’s nuclear submarine program to U.S. private equity firm Cerberus Capital. The potential deal involves parts of the mechanical engineering division of Goodwin, a 143-year-old British manufacturer, which is involved in the Navy's new Dreadnought nuclear submarines.
Fears over national security have been amplified due to the sensitive nature of the work and the increasing number of British defense companies being acquired by foreign entities. This trend has raised concerns among retired naval officials and former government ministers about a potential loss of sovereign control. Retired Admiral Lord West expressed growing unease about the foreign takeover of UK firms, particularly in the defense sector, emphasizing the need for careful consideration to avoid compromising national security.
Former Defense Secretary Lord Heseltine advocated for ministers to scrutinize the deal under the National Security and Investment Act (NSI). Introduced in January 2022, the NSI Act allows the government to screen and potentially block acquisitions of companies in critical industries if they pose a national security threat. While the sensitivity of military assets suggests the Goodwin deal will undergo scrutiny, past transactions have sometimes been approved without significant hurdles.
The proposed sale comes amid broader geopolitical tensions, including strains in the UK-U.S. relationship. Reports suggest that U.S. Deputy Defense Secretary Steve Feinberg co-founded Cerberus Capital, further fueling national security anxieties. The situation is further complicated by recent political discussions between the UK and U.S. regarding international policy and defense support.
Goodwin, a FTSE 250 company, reported profits of £77.5 million in the year to April, marking a significant year-on-year increase. The company's mechanical engineering segment has seen substantial improvement, enhancing its strategic value and attracting external interest. While the UK remains Goodwin's largest market, the U.S. market has grown considerably in recent years.
Cerberus Capital has stated that Goodwin's operations and manufacturing will remain based in Stoke-on-Trent under the proposed deal. The firm also indicated an intention to enhance production capacity in the UK through an existing partnership with the Ministry of Defence. Despite these assurances, the potential sale has led to a drop in Goodwin's share price, with shares falling 3.7% and accumulating a 30.8% loss for the year.