THE anouncement by engineering group GKN that it is poised to sell its stake in helicopter maker AgustaWestland for £1.06bn signals the withdrawal of the UK from helicopter manufacture.

The company said it had agreed in principle to sell its 50 per cent stake in the aerospace group to Italian engineer Finmeccanica.

GKN described the deal, which includes the transfer of property at Yeovil to Finmeccanica, as a transforming move for the group.

It said it would allow the company to cut its debt and to use selective acquisitions to strengthen its automotive business and other aerospace activities.

The sale to Finmeccanica, which holds the other half of Agusta, will leave the industry dominated by North American and continental European manufacturers such as Sikorsky, Boeing, Bell and Eurocopter, owned by European aerospace group EADS.

The helicopter maker was at the centre of the Westland Affair in the mid-1980s, which led to the resignation from the Thatcher Government of former defence secretary Michael Heseltine.

Mr Heseltine left following a dispute over a rescue package for the company, then known as Westland, which had serious financial problems.

GKN announced last week that it was in talks with Finmeccanica about the sale of its stake, which remains subject to shareholder and regulatory approvals.

GKN chief executive Kevin Smith said that although Agusta had created tremendous value for the group and Finmeccanica, the agreement would allow both shareholders to take advantage of that value.

"It is the right price at the right time," said Mr Smith.