The UK engineering group is negotiating the sale of its naval components business to Cerberus Capital for £1.1 billion, a deal that would leave Goodwin focused on refractory and technology operations while facing national security reviews in both London and Washington.
The Stoke-on-Trent engineering group confirmed Wednesday it is in advanced negotiations to sell a substantial part of its Mechanical Engineering division — the unit housing its defence assets — to New York-based private equity firm Cerberus Capital Management for £1.1 billion ($1.49 billion), a divestiture that would reshape the 143-year-old company into a focused refractory and technology business.
Shares in the London-listed company, which plunged 19 percent to 16,197 pence on Tuesday after the Financial Times first reported the talks, recovered as much as 10 percent to 16,980 pence on Wednesday as investors weighed the potential cash injection against the loss of the group's fastest-growing business. The stock remains down roughly 25 percent this year, leaving Goodwin with a market capitalization of about £1.22 billion.
The proposed transaction covers Goodwin Steel Castings, Goodwin International, Noreva, Easat Group and Pumps — assets that supply components for the UK's Dreadnought submarine programme as well as US Virginia-class and Columbia-class submarines, guided-missile destroyers and the Gerald R Ford-class aircraft carrier. Because of the sensitivity of these military supply chains, any deal would face scrutiny from both UK and US authorities over national security risks, people familiar with the matter cautioned.
"Goodwin's mechanical engineering division has been the primary driver of its record performance, and its strategic value has drawn considerable outside interest," Timothy J W Goodwin, the company's chair, said in August when the strategic review was announced. The division generated record profit of £77.5 million on revenue of £280 million in the fiscal year ended April, a 118 percent increase from a year earlier.
A family-controlled group at a crossroads
The divestiture would leave Goodwin consisting of its refractory and technological divisions, which produced only about £10 million of operating profit last year — a fraction of the mechanical engineering unit's contribution. That gap explains why the market initially punished the stock on Tuesday before recovering: the £1.1 billion price tag, if realised, would value the defence assets at roughly 14 times their annual profit contribution, a premium that reflects both the strategic nature of the business and the current private equity appetite for defence-related assets.
Cerberus, founded in 1992 by Stephen Feinberg — who now serves as a US defence official — manages about $70 billion across credit, private equity and real estate strategies. The firm has a track record of investing in aerospace and defence assets, and its interest in Goodwin follows a broader wave of buyout firms circling UK defence suppliers this summer. Goodwin said it had attracted interest from several private equity firms before entering exclusive talks with Cerberus.
The deal structure remains fluid. Sources cautioned that discussions could shift and no sale has been finalised. Both Goodwin and Cerberus declined to comment on the talks. If completed, the transaction would require approval from UK authorities under the National Security and Investment Act and potentially from the Committee on Foreign Investment in the United States, given the assets' role in US naval programmes.
For Goodwin, half-owned by its founding family, the sale would unlock a substantial cash return while de-risking the balance sheet from the concentration of defence revenue. For Cerberus, the acquisition would add a supplier with entrenched positions in two of the world's largest naval shipbuilding programmes — a rare asset class that private equity has increasingly sought to own as Western governments boost defence spending.
The outcome hinges on whether the two sides can bridge remaining gaps on price and regulatory comfort. A deal could be reached within days, according to people familiar with the matter, though the complexity of the national security review process means a formal closing could stretch well into 2027.
This article is for informational purposes only and does not constitute investment advice.
