Ministers are undertaking an assessment of whether the proposed takeover of GKN should be blocked on national security grounds, a senior civil servant has told MPs.

Business Department permanent secretary Alex Chisholm said the assessment was not complete and an announcement on its result could come before or after the end of the bid process.

Engineering giant GKN is fighting a £7 billion hostile takeover bid from UK-based turnaround specialists Melrose, with shareholders due to decide by the end of March.

Jeremy Corbyn cited the Melrose bid on Tuesday as he promised a Labour government would change rules to make it harder for “asset-strippers” to block takeovers that damage the UK’s industrial base.

Alex Chisholm talking to a Commons committee (parliamentlive.tv)

Mr Chisholm, the top civil servant at the Department for Business, Energy and Industrial Strategy, said that under rules set out in the 2002 Enterprise Act, Business Secretary Greg Clark can intervene only on grounds of national security, media propriety or financial prudential concerns.

“Clearly the only one of these three that could potentially apply would be national security,” he told the House of Commons Business Committee.

“So an assessment of whether national security interests justify intervention will have to be made in the event there is actually a takeover bid.”

He added: “That assessment hasn’t been completed. In mergers of this kind, where there is a possibility of national security issues arising, absolutely you would always find that a careful assessment is made, not just by our department, but by other parts of Government as well.”

Asked by committee chairwoman Rachel Reeves if such an assessment was ongoing, Mr Chisholm replied: “It is.”

If it is decided that the takeover raises public interest issues, Mr Clark will act in a quasi-judicial role in determining the outcome and must show he is acting impartially and with an open mind, said Mr Chisholm.

The Business Secretary has met the chief executives of GKN and Melrose, but cannot become involved in the process at this stage.

Asked when the results of the national security assessment would be known, Mr Chisholm said: “It’s open to the Government to determine whether or not it intervenes – if it chooses to – either before the bid process is complete or afterwards.

“If you look back through the history of national service interventions over the last 20 years, both types have applied.”

Around a dozen interventions have been made in takeover bids on national security grounds in the 16 years since the 2002 Enterprise Act, he told the cross-party committee.

Defence Secretary Gavin Williamson later told the Commons Defence Committee that he had written to the Business Secretary expressing “very serious concerns” about the proposed takeover.

“What I want is reassurance about the military side of the business,” he said.

“There is no clarity as to what the true approach is going to be in terms of the GKN military side of the business.”