Asset stripping of GKN begins with £2bn sale

Just three months after vultures took over engineer . . .

ASSET- stripper Melrose has fired the starting gun on its selloff of engineer GKN.

Bosses are plotting to kick-off the sale of its powder metallurgy division potentially as soon as this autumn, according to reports.

The business accounted for about £1.1bn of GKN’s £10bn sales in 2017. It is thought it could fetch between £1.5bn and £2bn.

Plans are being drawn up and investment bank Rothschild is in line to be hired as adviser, Sky News reported.

It comes just three months after turnaround firm Melrose bought car and plane parts-maker GKN for £8.1bn. They won a bitter hostile takeover battle with 52pc of the vote.

During the bid, bosses said they planned to sell powder metallurgy in the medium term and only after improvement. They criticised GKN’s own plans to sell the division before boosting its value.

Sources have now confirmed to Sky News that the division will be sold in the near term.

Industry analyst Howard Wheeldon said there was likely to be interest in the division from China or Japan. He said: ‘It’s a great company that has been developed by GKN over the past 25 years and is a very big player globally.

‘I believe it is a gem of a business and could have massive potential in the right hands.

‘If GKN had survived as an independent business, I would have liked it to stay part of the group, but I think the future of powder met is far better secured with a company that wants to develop it.’ Powder metallurgy makes specialised metal powders used in parts for cars, planes and engineering equipment, and also makes around 11m parts itself.

It employs 6,000 around the world, with key sites in France, Germany and elsewhere, but not the UK. It is Redditch-based GKN’s third core division alongside aerospace and automotive.

Under a deal agreed following the takeover, the UK government can block the sale of parts of GKN on national security grounds.

The planned sale suggests Melrose bosses are wasting no time in implementing their plans for GKN. Chief executive Simon Peckham, 55, executive chairman Christopher Miller, 66, and executive vice-chairman David Roper, 67, have a strategy of selling firms on within three to five years. They made £40m each last year.

Sources close to Melrose stressed a timetable for the sale of powder metallurgy has yet to be fixed and could slip back to next year. Melrose did not comment.