US private equity group agrees £1.1bn takeover of key UK defence supplier

Goodwin PLC has agreed to sell large parts of its mechanical engineering division to US private equity group Cerberus Capital Management for up to £1.1bn.

The transaction covers Goodwin Steel Castings, Goodwin International, Germany-based Noreva, Easat Group and Goodwin’s Pumps Division. Together, the businesses supply high-integrity engineered products to aerospace and defence, nuclear, power and mining customers.

Cerberus says the division serves the British, US and Australian navies and is involved in the AUKUS programme.

That makes the proposed takeover more than a conventional industrial acquisition. Goodwin businesses manufacture components for naval and submarine programmes, including work associated with UK’s Dreadnought class ballistic-missile submarine programme.

The transaction will consequently require clearance under the UK’s National Security and Investment Act 2021, alongside other foreign direct investment and antitrust approvals. Goodwin disclosed the requirement explicitly in its filing with the London Stock Exchange.

Completion is expected during the first quarter of 2027.

Goodwin’s defence and nuclear businesses sit deep inside allied naval supply chains

Goodwin Steel Castings and Goodwin International manufacture large, technically demanding castings and machined components for defence and nuclear applications. Easat specialises in radar systems, while Noreva produces specialist valves.

Cerberus described the collection of businesses as possessing proprietary designs, advanced manufacturing capability and specialist engineering expertise.

Goodwin has also been expanding its work in the US naval market.

A previous strategic collaboration with Northrop Grumman’s Mission Systems business covered four defence programmes and included an initial $16m (£11.8 million) order.

Goodwin said at the time that expected orders could rise above $200m (£148 million) as US submarine programme funding was released. It was also selected as sole supplier for a critical programme component using patented Goodwin technology.

Cerberus has meanwhile made the transatlantic defence relationship central to its case for the acquisition.

“The Mechanical Engineering Division of Goodwin represents a collection of strengths that we intend to support and grow over time,” Michael Sanford, Cerberus global head of private equity and co-head of Supply Chain investing, said.

“With differentiated engineering expertise, advanced manufacturing operations, and long-standing positions within critical supply chains, these businesses are well positioned to meet growing customer demand.”

The buyer has committed to keeping the acquired operations headquartered in Stoke-on-Trent, which will remain their principal manufacturing centre. It also says it plans to build on Goodwin’s existing relationship with the Ministry of Defence to increase manufacturing capacity in Britain and support AUKUS.

National-security clearance is written into the transaction

Cerberus is American, has operated from London since 2005 and presents its Supply Chain investment strategy specifically around the security and resilience of the US, UK and other allied countries. The platform has made more than two dozen investments since 2022 in areas ranging from aerospace and defence to microelectronics, critical minerals, power and telecommunications.

But Goodwin’s position in sensitive defence supply chains means the transaction falls squarely within the kind of acquisition the UK’s investment-screening system was created to examine.

Under the National Security and Investment Act, the government can scrutinise acquisitions that could create national-security risks and impose conditions or, in exceptional circumstances, block them.

Goodwin’s own transaction documents remove any doubt that the process will apply here. Completion is conditional on clearance under the NSI Act as well as other mandatory foreign investment and security regimes internationally. The parties have set a long-stop date of 6 June 2027 for those conditions to be satisfied.

Cerberus is buying the division after a sharp rise in defence-driven earnings

The timing also reflects the growing value being placed on companies that sit inside defence and nuclear manufacturing chains.

Goodwin’s mechanical engineering business generated revenue of £210.3m in the year to 30 April 2026, up from £152.5m a year earlier. Operating profit jumped to £70.2m from £25.3m, while profit after tax rose from £19.7m to £51.8m.

The division had net assets of about £58m at the end of the period.

Goodwin began a strategic review in August after what it described as strong commercial performance and growing external interest in the mechanical engineering businesses. Cerberus emerged from the sale process as the preferred buyer.

Chairman Timothy J W Goodwin called the agreement “a significant milestone in the history of Goodwin” and said Cerberus had a relevant record of supporting businesses in the defence and industrial sectors.

The company intends to return a significant proportion of the net proceeds to shareholders. Its Refractory Engineering and Technological divisions, including Internet Central and Duvelco, are not included in the transaction and will remain with Goodwin.

Before completion, the mechanical engineering businesses will be transferred into a newly incorporated company, which will then be acquired by a Cerberus affiliate.

Cerberus frames the acquisition around UK-US industrial resilience

Cerberus has been careful to present the acquisition in strategic rather than purely financial terms.

Chief executive Frank Bruno said the firm’s Supply Chain strategy was intended to support “technology leadership, industrial strength, and supply chain resilience for the US, UK, and our allies”.

“Our long-term commitment to steward the growth and success of the Mechanical Engineering Division of Goodwin shows how important we believe investments in leading UK companies are to advancing the collective security and resilience of all Western-allied nations,” Bruno said.

Sanford used similar language in Goodwin’s stock-exchange announcement, saying Cerberus invests behind defence and industrial companies serving the needs of Western allies and that the Goodwin businesses would be supported to expand their contribution to “our collective security”.