Predator in plot to axe jobs at GKN
As Melrose launches £7.4bn bid for engineer . . .
Buyout group Melrose is plotting a ruthless cull of head office jobs at GKN, having launched a hostile £7.4bn bid for the embattled engineer.
the turnaround specialist could also break up the business in three to five years if its raid is successful.
But the plans were met with opposition from critics who called for ministers to intervene – and even block a deal that threatens the future of a company that employs 9,000 staff in the uK.
GKN makes parts for fighter jets, Black Hawk helicopters and airliners as well as for Audi and BMW cars.
Having seen its approaches flatly rejected by the GKN board, Melrose yesterday appealed to GKN shareholders to back its plans in what would be the biggest hostile takeover in the uK since Kraft swooped on Cadbury in 2009.
Melrose executive chairman Christopher Miller vowed to transform GKN by axing the ‘dead hand of bureaucracy’.
He said the firm’s Redditch headquarters – where 200 people work – would be first. ‘We are not known for being lovers of head offices and will reduce it by as much as is required,’ he said. ‘It is a culture change. GKN is a venerable company, it is 250 years old, and sadly it behaves like it.’
Dismissing turnaround plans proposed by new chief executive Anne Stevens, who was appointed last week, Miller said Melrose would overhaul GKN and sell parts within three to five years.
‘there will be pieces and stakes that people want to buy,’ Miller said. ‘there are lots of components in GKN that can be improved and will be attractive.’ He insisted retirees and workers had ‘no need to worry’ despite warnings from pension scheme trustees about the deal.
He promised to increase capital spending and rein in the company’s pension black hole, although he disputed a £ 1.1bn deficit quoted by trustees, saying it was closer to £800m.
After an initial offer that valued GKN shares at 405p each, which was rejected, Melrose has offered 430.1p. this would see Melrose acquire 43pc, with GKN shareholders owning the rest.
An insider at one of GKN’s top five investors said the offer was ‘more than reasonable’.
the shares rose 1.3pc, or 5.6p, to 447.6p. Stevens said: ‘the terms fundamentally undervalue the company and we are actively engaging with shareholders to explain how our transformation plan will provide value.’
Sir Vince Cable, the Liberal Democrat leader, has written to business secretary Greg Clark urging him to intervene.
He said: ‘this company is absolutely fundamental to the industrial strategy, particularly the car and aerospace sectors, because it is a leading engineer.
‘What Melrose is saying is very worrying because GKN operates over long timeframes and so the worst thing that could happen is for it to fall into the hands of an owner required to produce shareholder returns in five years.’