Cerberus, the private equity firm founded by billionaire investor Stephen Feinberg, is nearing a roughly $1.3 billion deal to acquire the defence business of London-listed engineering group Goodwin. The unit, valued at approximately $1.3bn, would carve out Goodwin's mechanical engineering division, including Goodwin Steel Castings, Goodwin International, Noreva, Easat and Pumps. Goodwin, a 143-year-old British component supplier for Dreadnought submarines, recently completed a strategic review of the division.

Given the sensitivities of military assets, the transaction could face scrutiny from British and US authorities to ensure no risk to national security. Founded in 1992 and based in Stoke-on-Trent, Goodwin is half-owned by the founding family. The company generated record profits of $100mn in the year to April, a 118 per cent year-on-year increase, from $96mn in revenue.

The deal would leave Goodwin comprising its refractory and technological divisions. Cerberus, based in New York with about $70bn of assets, has previously invested in the aerospace and defence sector. Goodwin and Cerberus declined to comment.