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Defence chiefs in talks to take control of one of Britain's oldest steelmakers

LaToya Harding
·Business Reporter, Yahoo Finance UK
·2-min read
A plaque is seen on the Ministry of Defence building entrance in London, September 15, 2010. British legislators warned the government on Wednesday that the country's military capabilities and its ability to conduct current operations could be endangered if it goes ahead with deep defence cuts. REUTERS/Suzanne Plunkett (BRITAIN - Tags: POLITICS MILITARY)
The Ministry of Defence (MoD) is holding preliminary discussions about acquiring control of the 215 year-old steel producer, which is one of the oldest steelmakers in the UK and makes casings for Britain’s fleet of nuclear submarines. Photo: Reuters/Suzanne Plunkett

The UK government is planning a move to take control of nuclear sub steelmaker Sheffield Forgemasters, it has been reported.

The Ministry of Defence (MoD) is holding preliminary discussions about acquiring control of the 215 year-old steel producer, which is one of the oldest steelmakers in the UK and makes casings for Britain’s fleet of nuclear submarines, Sky News said.

The move is an attempt to shore up the company’s supply chain as it battles against the chaos caused by the pandemic.

Sheffield Forgemasters, which made an operating profit of £1.7m ($2.3m) in 2019, said it would slash around 100 jobs in October this year, representing more than 10% of its workforce, as COVID-19 hit demand from commercial customers in industries such as oil and gas.

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Steel industry sources told the broadcaster this weekend that the MoD had onboarded accounting firm Deloitte to advise on discussions.

They warned that an outright takeover of the business was only one of a number of options currently being examined, and that any agreement was likely to be several months away.

A National Security and Investment Bill that was recently published includes more than a dozen sectors, including defence and military and dual use, where foreign ownership would require mandatory notification.

READ MORE: Rolls-Royce sells 94% of new shares as it raises £2bn to weather crisis

Five years ago ministers blocked a planned rescue deal of Sheffield Forgemasters after it was approached by an unidentified state-owned Chinese firm.

It was revealed a year later that BAE Systems (BA.L), Babcock International (BAB.L) and Rolls-Royce Holdings (RYCEY) had stepped in to underwrite £30m of bank lending provided to Sheffield Forgemasters by the American bank Wells Fargo.

An MoD spokesperson told Sky: "Sheffield Forgemasters is a strategic supplier to our programme and therefore we are in regular dialogue with them.

"It would be inappropriate to comment further due to commercial sensitivities."

Yahoo Finance has reached out to the MoD for comment.

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