Goodwin considers selling part of defence business
The firm is a key supplier of components to UK and US frigate and submarine programmes.
British engineering firm Goodwin, a vital supplier for major defense and nuclear initiatives, is contemplating the sale of certain business segments.
The Stoke-on-Trent-based company announced it is exploring the potential divestment of a "substantial part" of its mechanical engineering division. This division encompasses Goodwin Steel Castings (GSC), Goodwin International (GI), Noreva, Easat, and Pumps.
In a statement released on Friday, the company's board confirmed the initiation of a strategic review. The purpose of this review is to "consider a range of potential options to maximise value for shareholders."
Goodwin clarified that discussions are ongoing and there is no guarantee that a sale will materialize. The company stated, "The board of Goodwin confirms that it has 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." It added, "Discussions are ongoing and there can be no certainty that a transaction will be entered into. Rothschild & Co is advising the board of Goodwin on the strategic review."
Goodwin's mechanical engineering division plays a crucial role in supplying components for UK and US frigate and submarine programs. This includes the UK's Dreadnought program, which is developing the Royal Navy's next-generation nuclear deterrent submarines, and the Type 26 frigate program, focused on creating a fleet of advanced anti-submarine warships.
According to its most recent annual report, Goodwin Steel Castings and Goodwin International have significantly boosted the company's profits, benefiting from increased defense spending by various economies.
A report in the Financial Times indicated that several potential buyers with experience in the defense sector have recently expressed interest in Goodwin.
Founded in 1883, Goodwin is primarily owned and managed by the Goodwin family, with its shares listed on the London Stock Exchange. The company's shares saw an increase of approximately 10% on Friday morning.
Russ Mould, investment director for AJ Bell, commented, "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 noted, "The company took a big hit in March when it lost two significant contracts and faced order delays in the Middle East."
Mould further 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." He concluded, "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."