Naval submarine supplier Goodwin is considering a sale of parts of its engineering business despite the recent boom in defence spending.

The 143-year-old firm, which is a key supplier to several UK and US navy programmes, said it had launched a strategic review to ‘maximise value for shareholders’.

That could see it offload its mechanical engineering segment, which is home to its defence-related manufacturing business, as well as its industrial engineering and pumps business.

Goodwin makes components for the Royal Navy’s nuclear submarines, including the Astute boats and the next-generation Dreadnought-class vessels.

‘The Board of Goodwin confirms that it has commenced a strategic review to consider a range of potential options to maximise value for shareholders whilst ensuring continuity for all stakeholders, including customers, and the long-term prosperity of its businesses,’ it told investors this morning.

‘These options include the potential sale of a substantial part of the Mechanical Engineering division, which includes GSC, GI, Noreva, Easat and Pumps.’

Shares in Goodwin rose 13.4 per cent to 21,320p this morning. 

It comes after the Financial Times reported that the FTSE 250 firm, based in Stoke-on-Trent, was in talks to sell its defence business with several buyout firms submitting expressions of interest in recent weeks.

Discussions are ongoing and there can be no certainty of a deal, the company said.

Goodwin Steel Castings and Goodwin International, part of the mechanical engineering division, have benefited from increased defence spending. But shares have suffered since the start of the Middle East conflict.

In the immediate aftermath, it warned that the valves it had ordered for LNG facilities in the Middle East or the US had been cancelled or put on hold. It prompted it to consider reducing dividend payouts.

Rising defence budgets have prompted more consolidation across the sector, with larger contractors targeting suppliers and military technology firms, while private equity giants are also eyeing deals. 

The FTSE 250-listed firm Senior is readying for a £1.4billion takeover by a consortium comprising Tinicum and Blackstone.

Experts have previously warned that the takeover could set the scene for further swoops on UK defence firms. A host of British defence companies have been taken over by foreign firms in recent years, including Cobham, Inmarsat, Meggitt and Ultra Electronics.