Chinese eye £1.5bn swoop for UK's Doncasters

Two Chinese industrial groups have emerged as potential bidders for Doncasters, one of the oldest names in British engineering and a major supplier to aerospace giants such as Boeing (NYSE: BA - news) and Rolls Royce (LSE: RR.L - news) .

Sky News has learnt that Yinyi Group and Impro are assessing takeover offers for Doncasters, a move which could trigger a fresh test of the Government's attitude to foreign ownership of British manufacturers.

Yinyi and Impro are major China-based companies employing thousands of people in operations around the world.

People close to an ongoing auction of Doncasters, which is being handled by Goldman Sachs (NYSE: GS-PB - news) , said the Chinese companies' expressions of interest were tentative and may not lead to formal offers.

Goldman is in the process of narrowing the field of bidders into a second round, they said.

Midlands-based Doncasters, which traces its roots back to 1778, specialises in working with metals and alloys that are difficult to shape, and employs more than 5,000 people.

It is expected to fetch well over £1bn from a sale and potentially as much as £1.5bn.

If they do proceed with formal offers, the Chinese groups would be pitted against interest from private equity firms including Blackstone (NYSE: BX - news) , Carlyle and Clayton Dubilier & Rice.

One factor mitigating against any possible concern from the UK Government about Chinese ownership is that Doncasters is already in the hands of foreign backers; since 2006, it has been part of the portfolio of Dubai International Capital, a private investment vehicle of the emirate's ruling family which is now being wound down.

In the three months since Theresa May entered Downing Street, a number of cross-border deals involving British companies have prompted suggestions from Downing Street that new scrutiny will be applied to foreign takeovers.

Last week, it was reported that the Prime Minister wanted to introduce a new vetting system for such transactions in a bid "to get the best deal" for Britain, although no details have emerged about how such a regime would operate.

Prospective deals involving Chinese investment into data centre operator Global Switch, Sheffield Forgemasters, a steel supplier to the UK's nuclear submarines, and the Hinkley Point C nuclear power station have sparked opposition from some parts of Whitehall.

Doncasters supplies both the civil and military aerospace markets, although there is no suggestion that ministers would seek to block a takeover by a privately-owned Chinese company.

In 2014, the British manufacturer made underlying pre-tax profit of about £136m, roughly flat on the previous year.

Its accounts for 2015 are expected to be filed at Companies House shortly.

A spokeswoman for Doncasters declined to comment.