Goodwin considers selling part of defence business

British engineering company Goodwin has said it is considering selling off parts of its business, which supplies components to major defence and nuclear programmes.

The Stoke-on-Trent-based group said it was exploring a possible sale of a "substantial part" of its mechanical engineering division, which includes Goodwin Steel Castings (GSC), Goodwin International (GI), Noreva, Easat and Pumps.

In a statement on Friday, the firm's board confirmed it had commenced a strategic review to "consider a range of potential options to maximise value for shareholders".

Goodwin said discussions were ongoing and that there was no certainty of a sale taking place.

"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," the company said.

"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 is a key supplier of components to UK and US frigate and submarine programmes.

This includes 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.

According to its 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.

The company, which was founded in 1883, is majority owned and managed by the Goodwin family, while it has shares listed on the London Stock Exchange.

Its shares were up by about 10% 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.

"The company took a big hit in March when it lost two significant contracts and faced order delays in the Middle East."

He 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."