Unfriendly fire evokes memories of takeover times past

Hostile takeover bids, a staple of the 1980s, have gone out of fashion in our more herbivorous corporate times. A whole generation of journalists knew the drill back in the day: aggressive suitors criticised target businesses as underperforming and under-managed. If they could, the aggressors alluded to the generous, undeserved remuneration and perks of the target’s board.

It was a given that the target would automatically hit back that the offer price was “opportunistic” and “derisory”.

So the hostile £7.4 billion takeover bid by Melrose Industries for aerospace-to-automotive group GKN stirs memories. Melrose, whose initial lower £7bn takeover approach (often another recognisable component of hostile engagements) was rejected last week, says a takeover would “re-energise and re-purpose” GKN.

Such euphemisms aside, the unsubtle subtext here is that GKN’S current management, under new chief executive Anne Stevens, has too vague a strategy.

Dipping into that old-time handbook of combative consolidation, GKN counters why hand 43 per cent of a combined entity to Melrose’s management when by retaining its independence its own shareholders could enjoy 100 per cent of a turnaround strategy?

GKN’S Achilles’ heel is self-acknowledged profit margins and cash generation below expectations. A key component of its new strategy under Stevens, is to separate the aerospace and automotive businesses, but with currently sketchy detail on the “optimal method” of separation.

Both Melrose and GKN are mounting charm offensives with investors, the former to try and get them on board the Viking ship, the latter to repel barbarians.

Puerile, perhaps, but sometimes an echo of more carnivorous takeover tussles “re-energises” the watching gallery.