GKN rejects Melrose ‘final offer’ of £8.1bn
GKN has rejected a “final” £8.1billion hostile takeover offer by turnaround specialist Melrose Industries.
Melrose sweetened its initial £7.4billion approach and increased the proportion of the combined UK-listed manufacturing “powerhouse” that would be owned by GKN’s shareholders from 57 per cent to 60 per cent.
But FTSE 100 engineer GKN dismissed the offer as “undervaluing” the business, when factoring in prospects for its “world- class” aerospace division.
GKN has also struck a £4.4billion deal to merge its automotive business with US auto parts group Dana and is committed to returning £2.5billion to shareholders over three years.
Melrose chairman Christopher Miller said GKN’s board had rebuffed attempts to engage in talks aimed at achieving a recommended offer.
He accused GKN of “attempting a hasty fire-sale of businesses before they have been given a chance to reach their potential and with damaging consequences for all stakeholders”.
He added: “The outcome of the disposals would leave behind a GKN Aerospace business burdened by a disproportionate, and very substantial, amount of gross pension liabilities, inappropriate for the size of the underlying business. This transaction poses risks for GKN pensioners and employees in both Driveline and Aerospace and would be bad for UK industrial strategy.”
GKN claimed Melrose’s revised 467p-ashare offer was, in fact, worth 445½p when taking into account a movement in the Melrose share price and excluding the value of the GKN final dividend.
GKN chairman Mike Turner said: “Melrose management lacks relevant experience and its short-term business model is inappropriate for GKN’s customers and its investors.”
GKN shareholders have until March 29 to decide. David Cumming at Aviva Investors said: “As shareholders in both Melrose and GKN we favour Melrose’s proposed measured execution of value rather than GKN’s reactive review of its business structure. The interests of shareholders in both are best served by accepting Melrose’s raised bid.”