UK's Goodwin to sell some defence assets to Cerberus for $1.5 billion

Goodwin Agrees to $1.5B Defence Asset Sale to Cerberus as Orders Surge

Goodwin's Strategic Defence Asset Sale and Market Impact

Deal Overview and Buyer Information

Sept 9 (Reuters) - British engineering group Goodwin has agreed to sell parts of a division that houses its defence assets for £1.1 billion ($1.49 billion) to U.S.-based private equity firm Cerberus Capital, it said on Wednesday. 

The sale to Cerberus, co-founded by U.S. Deputy Secretary of Defense Steve Feinberg, comes as demand has risen due to strong orders for precision-machined castings used in defence and nuclear projects, and increasing exports to the U.S. Navy. 

Market Reaction and Analyst Commentary

Shares in the London-listed engineering company, which dropped 23% on Tuesday after the Financial Times first reported the deal talks, were down another 4% on Wednesday.

Analyst Perspective on Valuation

"That (price) might be considered reasonable for some castings players – but not a key supplier to the U.S. and UK navies, with access to the latter’s continuous at sea deterrence programme," said John West, global head of analysis at Mergermarket, explaining Tuesday's share drop.

Use of Proceeds and Company Strategy

Goodwin plans to use a significant part of the proceeds from the sale to return money to shareholders.

Background and Division Details

Timeline of the Sale Process

GOODWIN STARTED EXPLORING POTENTIAL SALE IN AUGUST

Goodwin, which makes industrial castings, valves, pumps and other specialist engineered products, in August started exploring a potential sale of parts of its mechanical engineering business as part of a broader strategic review. 

Assets Included in the Deal

The deal covers a substantial part of Goodwin's Mechanical Engineering division, which includes Goodwin Steel Castings, Goodwin International, Noreva, Easat Group and Pumps, it said. 

Performance and Market Focus

The unit makes components for UK and U.S. naval ship and submarine programmes. It was a stand-out performer last year, growing revenues by nearly 39% in fiscal 2026.   

Regulatory and Market Considerations

Any deal with a foreign buyer for Goodwin's defence assets would attract scrutiny by the UK government under the National Security and Investment Act. 

The UK remains Goodwin's largest market by revenue at 29% of its total, but the U.S. market has grown its share to about 24%, according to its latest annual report.  

($1 = 0.7376 pounds)

(Reporting by Nithyashree R B in Bengaluru; Editing by Mrigank Dhaniwala and Jan Harvey)