Goodwin considers selling part of defence business

British engineering firm Goodwin is contemplating the sale of a significant portion of its mechanical engineering division, which is a major supplier to various defence and nuclear programmes. The company's board has initiated a strategic review to explore potential options for maximizing shareholder value. The division includes well-known subsidiaries such as Goodwin Steel Castings, Goodwin International, Noreva, Easat, and Pumps. Discussions are ongoing, and no certainty can be given regarding the sale's eventual occurrence.

Goodwin's mechanical engineering division plays a crucial role in supplying components to UK and US frigate and submarine programmes, including the construction of Britain's Dreadnought programme, which is developing the Royal Navy's next-generation nuclear deterrent submarines, and the Type 26 frigate programme, aimed at creating a fleet of advanced anti-submarine warships. The division's business has been boosted by increasing defence spending.

Recent reports suggest that several potential buyers with defense industry experience have expressed interest in Goodwin in recent weeks. The company, founded in 1883, is majority owned and managed by the Goodwin family, with its shares listed on the London Stock Exchange. Shares in Goodwin experienced a 10% increase on Friday morning.

Russ Mould, investment director for AJ Bell, praised the company, stating that it is a major supplier to UK and US submarine programmes and has also benefited from robust defence spending across other aspects of its business. He acknowledged that the company experienced a significant setback in March when it lost two substantial contracts and faced order delays in the Middle East.

Despite this, the interest in Goodwin's defense arm highlights the UK's presence of globally competitive engineering businesses in their respective fields.

While the potential sale's impact on Goodwin's future as a standalone business remains uncertain, it is expected that the company will continue to derive a substantial portion of its revenue from military spending.