British engineer Goodwin has confirmed it is considering selling off parts of its business that supply components to major defence and nuclear programmes.
Strategic review launched
The Stoke-on-Trent-based group, which comprises several companies, said it has commenced a strategic review to consider a range of options to maximise value for shareholders while ensuring continuity for all stakeholders, including customers, and the long-term prosperity of its businesses.
These options include the potential sale of a substantial part of the mechanical engineering division, which includes GSC (Goodwin Steel Castings), GI (Goodwin International), Noreva, Easat, and Pumps.
Key supplier to defence programmes
The mechanical engineering division 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.
Goodwin Steel Castings and Goodwin International have particularly boosted the company's profits, benefiting from increased defence spending by economies, according to its latest annual report.
Potential buyers and market reaction
A report in the Financial Times said several potential buyers with records in defence had expressed interest in Goodwin in recent weeks, citing people familiar with the matter. Goodwin said discussions were ongoing and there was no certainty of a sale taking place.
The company, founded in 1883, is majority owned and managed by the Goodwin family and has shares listed on the London Stock Exchange. Its shares were up by about a tenth on Friday morning.
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."
Mould added: "The company took a big hit in March when it lost two significant contracts and faced order delays in the Middle East. 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."
