Industry proposes new takeover procedure to monitor foreign acquisitions

EEF, the manufacturers’ organisation has called for a new, independent Foreign Investment Evaluation (FIE) process as part of a wider framework to assess the potential benefits of foreign takeovers of UK companies.

The call was made in response to the Takeover Panel’s consultation on extending assurances given by overseas companies when acquiring UK assets. It also comes on the back of the Government’s recent Green Paper on foreign investment in critical infrastructure. Whilst EEF supports extending the assurances to be given by acquirers, it believes this is only a partial solution to ensure the best outcomes for businesses which are bought and their domestic supply chain.

According to EEF, foreign investment has generally been a force for good in the UK. However, there have been cases where jobs, investment and the supply chain have been impacted when the intentions of foreign acquirers are not aligned with the UK’s wider economic interests.

As such, whilst the Takeover Panel’s recommendations are welcome, EEF believes they need to be part of a new framework which strikes a better balance between ensuring the protection of key economic assets, whilst retaining the UK’s openness to beneficial foreign investment.

EEF’s new proposal would see a new, FIE process carried out by a panel which would be independent to maintain political neutrality. The panel would take into account the wider effects of a takeover, such as the impact on supply chains or loss of technological capability, before determining on balance whether the takeover would be beneficial.

If the takeover fails the FIE then the Independent Panel would inform the Secretary of State for Business who can then block it.

Commenting, EEF Chief Economist, Ms Lee Hopley, said:

“Manufacturers have an interest in ensuring the UK has the right frameworks in place to make sure foreign acquisitions work for all involved – the company, high value jobs and also the domestic supply chain. The Takeover Panel’s consultation is a welcome first step in starting to move towards a more transparent and robust framework that can work for industry and our economy.

“However, this must be part of a debate about whether additional architecture is required in order to make clear judgements and potential interventions to prevent the takeover of assets which do not provide a net benefit to the UK.”