Melrose’s £8.1bn bid for UK engineering giant GKN rejected

Engineering company GKN has rejected a final £8.1 billion takeover offer from Melrose Industries, saying it “continues to fundamentally undervalue” the firm.

Melrose had raised the stakes in the takeover battle for GKN with a “final offer” which valued the UK engineering giant at £8.1bn.

That compares with the £7.4bn bid previously put forward by Melrose.

The most recent offer to GKN shareholders was a total of £1.4bn in cash and the chance to own a 60% stake in Melrose.

The turnaround specialist said it represented an “attractive immediate premium” of 43% on GKN’s closing price on January 5 of 467p per share.

In a letter to GKN shareholders, Melrose chairman Christopher Miller had hit out at the takeover target’s own efforts to fight off the hostile bid, particularly GKN’s recent agreement to merge its automotive business with US firm Dana in a £4.4bn deal.

“We are nearing the end of the customary offer timetable and it is now time for you to decide,” Mr Miller said.

“On the one hand you can join us on a journey of value creation by investing in a UK listed manufacturing powerhouse worth over £10bn today and receiving £1.4bn of cash.

“On the other hand your board is attempting a hasty fire-sale of GKN businesses before they have been given a chance to reach their potential and with damaging consequences, we believe, for all stakeholders.”

GKN announced the terms of the Driveline deal last week which would have seen Dana shareholders own 52.75% of the company and GKN the remainder, with the combined company set to be domiciled in the UK but traded on the New York Stock Exchange.

Mr Miller said some GKN investors would not have been able to hold the foreign listed shares, adding the Driveline agreement was likely to involve a “lengthy and uncertain completion process” with competition clearances needed in the US, EU and China.