The UK defense ministry has launched an offer to acquire Sheffield Forgemasters International Limited (SFIL), a struggling company delivering components for the UK’s critical existing and future defense programs.
Subject to shareholder approval, the takeover would allow the government to refinance the company and secure the supply of components.
The defense ministry intends to invest up to £400 million into defense-critical assets, including plans for a new heavy forge line and building, a flood alleviation scheme, major machine tool replacements and a site-wide HV upgrade.
According to the ministry, the immediate cost of the acquisition is £2.56 million for the entire share capital of the company plus debt assumed.
The transaction also involves a refinancing of the company’s credit facilities with a new working capital facility to be provided by the defense ministry. As a result, the financial guarantees provided by Rolls-Royce, BAE Systems and Babcock will fall away upon completion of the transaction, the company said.
SFIL is the only available manufacturer with the skills and capability to produce large scale high-integrity castings and forgings from specialist steels in an integrated facility to the highest standards required for these programs.
The defense ministry noted its SFIL ownership would not prevent other UK based manufacturers from bidding for MOD contracts, which will continue to be run in an open and fair competition.