October 20, 2019

October 18, 2019

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CFIUS Filing Clearance: Melrose Industries and GKN PLC

Status:  Clearance

Acquirer:  Melrose Industries PLC (UK)

Acquired:  GKN PLC (UK)

Value:  Approximately US$11 billion (£8.8 Billion)

Industry:  Aerospace; Automotive; Engineering

On February 1, 2018, Melrose Industries PLC, a UK investment company that specializes in acquisitions of manufacturing businesses, launched a formal tender for the acquisition of GKN PLC, a UK based global engineering, aerospace, and automotive manufacturing company with operations in the United States serving the defense industry.  (See Melrose Industries PLC, Offer Document, Feb. 1, 2018.)  GKN produces “components for military aircraft including the Lockheed F-35B fighter jet.” (The Guardian, MPs call for government to block Melrose’s £8bn hostile takeover of GKN, Mar. 29, 2018.)   According to the February 1 offer document, Melrose stated that “[a] draft notification has been submitted to CFIUS” in relation to the acquisition, as well as antitrust notifications to the German BMWi and the French Ministry of Economy.  (Melrose Industries PLC, Section 4, Offer Document, Feb. 1, 2018.)   CFIUS is a condition precedent to closing the transaction. (Id., Section 3.)   On June 25, 2018, Melrose stated “that clearance from the Committee on Foreign Investment in the United States (“CFIUS”) in respect of its Offer for GKN has been obtained. CFIUS has concluded its review and has determined that, based on its investigation, there are no unresolved national security concerns.”  (Melrose Industries PLC, CFIUS Clearance, Jun. 25, 2018.)

In March 2018, in an effort to keep within the expected timetable for the Final Offer,  Melrose waived the CFIUS and DSS conditions to its offers” to the extent that CFIUS and DSS approvals have not been received before 17 April 2018.” (Melrose Industries PLC, Waiver of the CFIUS and DSS clearance conditions, Mar. 23, 2018.) At that time, Melrose stated it had discussed with CFIUS the option of “interim mitigation measures, which would leave in place any existing mitigation arrangements pending receipt of CFIUS and DSS approvals.” (Id.)

© Copyright 2019 Squire Patton Boggs (US) LLP


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