GKN loses £8bn takeover battle
GKN has lost its battle for independence after the engineering giant’s investors backed an £8billion takeover by Melrose Industries.
Britain’s biggest hostile takeover since Kraft swallowed Cadbury nearly a decade ago went to the wire more than two months after turnaround specialist Melrose made its initial unsolicited move.
By yesterday’s 1pm deadline, Melrose had secured 52.43 per cent support – above the 50 per cent plus one share level it had set – for its cash and shares offer, valuing the FTSE 100 aerospace and auto parts engineer’s shares at 465p. GKN shareholders will own 60 per cent of the combined company.
GKN had tried to fend off the approach by proposing a merger of its automotive business with American auto parts group Dana and a pledge to return £2.5billion to investors over three years.
But despite an outcry from some politicians and unions, and a warning from GKN’s biggest customer Airbus that it could lose new work under a change in ownership, Melrose won the crucial shareholder battle after making various commitments on spending and the future of the aerospace business.
Melrose chairman Christopher Miller said: “We are delighted and grateful to have received support from GKN shareholders for our plan to create a UK industrial powerhouse with a market value of over £10billion and a tremendous future.
“We are looking forward to working with GKN’s talented workforce and to delivering for customers and all stakeholders. Melrose has made commitments as to investment in research and development, skills and people and we are very excited about putting these into action.
“Let me assure you that GKN is entering into very good hands. We are full of enthusiasm as we begin this next stage of the Melrose story and look forward to creating substantial value for our shareholders, old and new.”
John Colley, of Warwick Business School, said: “Melrose has outflanked GKN in terms of a consistent campaign based on improving the business and distributing the benefits to shareholders before any sale, an approach in which they do have a credible record.
“The risk is Melrose’s inexperience of running such a large business and a new management team which has little knowledge of the business.”