Goodwin shares up about 10% on Friday morning
Goodwin, the Stoke-on-Trent-based engineering group, said Friday it is exploring the possible sale of a “substantial part” of its mechanical engineering division, a unit that supplies components to major defence and nuclear programmes.
In a statement, the firm’s board confirmed it had commenced a strategic review “to consider a range of potential options to maximise value for shareholders whilst ensuring continuity for all stakeholders, including customers, and the long-term prosperity of its businesses.” The company said discussions are ongoing and that there can be no certainty that a transaction will be entered into, with Rothschild & Co advising the board on the review.
The division under review includes Goodwin Steel Castings (GSC), Goodwin International (GI), Noreva, Easat and Pumps. It is a key supplier of components to UK and US frigate and submarine programmes, including Britain’s Dreadnought programme, which is building the Royal Navy’s next-generation nuclear deterrent submarines, and the Type 26 frigate programme, which is developing a fleet of advanced anti-submarine warships. The Dreadnought-class submarines are set to replace the UK’s Vanguard-class submarines.
According to Goodwin’s latest annual report, Goodwin Steel Castings and Goodwin International have delivered a boost to the company’s profits, having benefited from economies increasing their defence spending.
A report in the Financial Times said several potential buyers that have records in defence had expressed interest in Goodwin in recent weeks.
Goodwin’s shares were up by about 10% on Friday morning.
Goodwin, founded in 1883, is majority owned and managed by the Goodwin family and has shares listed on the London Stock Exchange.
Russ Mould, investment director for AJ Bell, said: “The company is a major supplier to UK and US submarine programmes and has also benefited from bumper defence spending across other parts of its business.” He said the company “took a big hit in March when it lost two significant contracts and faced order delays in the Middle East.”
Mould added: “Yet the interest in Goodwin’s defence arm is a reminder that the UK has a collection of engineering businesses which are global leaders in their respective niches. What any sale would mean for the future of Goodwin as a standalone business remains an open question but it is likely to still derive a significant chunk of its revenue from military spending regardless.”