Turnaround firm Melrose has offered to invest £1bn in engineering giant GKN’s pension fund as it battles to secure a takeover deal, the BBC understands.
The move could allay concerns from the pensions watchdog and MPs which have called for the deal to be blocked.
The offer comes after GKN rejected what Melrose said was its final offer worth around £8.1bn earlier this week.
GKN makes parts for Boeing 737 jets and Black Hawk helicopters, as well as parts for Volkswagen and Ford cars.
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It is one of the UK’s largest industrial firms, employing more than 59,000 people globally – 6,000 of them in the UK.
Melrose specialises in buying up industrial companies it believes are undervalued and restructuring them before selling them on.
That has raised fears that GKN could broken up and sold to overseas owners.
The Pensions Regulator had also warned that the deal could weaken GKN’s ability to meet its pension obligations.
Melrose originally offered to invest £150m cash into the GKN pension schemes.
Melrose declined to comment, but it has previously emphasised its history of improving company pension schemes, rather than running them down.
“Melrose has consistently strengthened the pension scheme covenants of the businesses that it has acquired. Every time we have disposed of a business we have left the business free from deficit,” it said earlier this month.
The battle over GKN has been been going on for almost two months, but will be concluded soon with shareholders having until until 29 March to vote on the offer from Melrose.
Some shareholders have already said they plan to reject the offer, arguing that the price on offer undervalues the engineering firm.
Unions and some customers have also warned over the implications of the deal.
Airbus – GKN’s biggest customer – said it would be “practically impossible” to give new business to GKN if the takeover went ahead.
GKN has already secured an alternative to a Melrose takeover, agreeing earlier this month to merge its automotive business with US firm Dana, while it focuses on the aircraft side of its business.
Either deal still needs to be signed off by GKN shareholders, who will now have to assess the merits of the two alternatives.
A brief history of GKN
Founded in 1759 as an ironworks in South Wales
Involved in aerospace, automotive, materials and manufacturing engineering
Operates in 30 countries with 59,000 employees
Employs 6,000 staff in the UK, mostly in aerospace and automotive technology
Ten UK sites, including Bristol, Cowes, Luton, Portsmouth, Birmingham and Telford.
Chief executive Anne Stephens took over in January