Fight for GKN turns nasty

Firm slams £7.4bn takeover bid

ENGINEERING giant GKN is at the centre of Britain’s biggest hostile bid since 2009.

The firm, which make parts for everything from Airbus planes to Jaguar cars, yesterday rejected a £7.4billion approach from turnaround specialist Melrose.

UK-based Melrose would also take on £1bn of debt to finance the mega deal.

It marks the UK’s largest unsolicited swoop on a firm since Kraft’s controversial – and ultimately successful – offer for chocolate maker Cadbury in 2009.

GKN traces its roots back to the Dowlais Iron Company founded in 1759 near Merthyr Tydfil, South Wales.

It now employs 58,200 people in 30 countries and has annual sales of £9.4bn.

GKN’s new chief executive Anne Stevens, who only started last week, appealed to shareholders to rebuff Melrose’s approach. She said: “We believe GKN’s owners should retain all the benefits of the clear upside potential in GKN, rather than handing almost half of this upside to Melrose.”

But the bid comes at a difficult time for GKN, which in November ditched its incoming boss less than two months before he was due to start, as it warned over another hit at its troubled US plant.

Melrose boss Simon Peckham said: “The real value uplift will come from merging the interests of the two sets of shareholders and creating a business valued at approximately £11bn today, of which GKN holders will own the majority.”

The deal would see GKN shareholders get 1.49 Melrose shares and 81p in cash for each share they hold.

The offer represents a 32% premium over GKN’s closing price on January 5, the last business day before Melrose made its first takeover approach.

GKN responded to the initial approach by Melrose last week by vowing to separate its aerospace and automotive businesses. Pension trustees have also waded into the takeover saga, warning of a £1bn black hole in GKN’s retirement schemes.