Goodwin closes in on £1.1bn sale of defence business
Stoke-on-Trent-headquartered engineering group Goodwin is in advanced discussions to sell a substantial part of its Mechanical Engineering division to funds advised by Cerberus Capital Management, for a headline cash consideration of up to approximately £1.1bn.
The potential sale covers Goodwin Steel Castings, Goodwin International, Noreva, Easat Group and Pumps, all part of the Mechanical Engineering division.
Goodwin said discussions are ongoing and there is no certainty a transaction will be entered into, nor as to its final terms, with a further announcement to follow as appropriate.
The update follows Goodwin’s confirmation in August that it had begun a strategic review of the division, after press speculation that the FTSE 250 firm was in talks to sell its defence business. Goodwin’s defence arm manufactures surveillance system parts and critical components for ships and submarines, and accounts for around 57% of the company’s forward order book.
It also comes weeks after the business reported record trading profit of £77.5m for the year to 30 April, up 118% on the previous year, with the Mechanical Engineering division seeing a substantial increase in orders for precision-machined, high-integrity castings used in defence and nuclear applications. Rothschild & Co, appointed to run the sale process, had been targeting completion within 12 months, with the board expecting to pay out a substantial proportion of any proceeds to shareholders.
Following the proposed disposal, the firm will retain its Refractory and Technological divisions, which together generated £118m in gross assets and £10m in operating profit for the year.
Rothschild & Co is advising Goodwin’s board on the potential transaction.
Goodwin, founded in 1883, saw its shares fall earlier this year after warning in March it was considering cutting dividend payouts, citing order delays in the Middle East linked to the Iran conflict. In September last year, its Goodwin Steel Castings business entered a strategic collaboration with Northrop Grumman International Trading on international defence programmes.
