Airbus weighs in to hostile GKN bid with threat of freeze on new work

● Aircraft maker accounts for 20% of engineering firm’s aerospace sales

GKN’S largest customer dealt a severe blow yesterday to Melrose’s £8.1 billion hostile takeover bid for the British engineering giant by threat‑ ening to put the block on any new contract orders if its ownership changed.

Tom Williams, the aircraft maker Airbus’ Scots‑born chief operating officer (COO), gave warning that it would be “practically impossible” to award any new business to GKN if the deal with turna‑ round specialist Melrose went ahead.

Williams, whose group spends about £400 million with Scottish suppliers annu‑ ally, said: “The nature of our industry is one that requires a commitment to long‑term investment and strategic vision.

“The industry does not lend itself to shorter‑term finan‑ cial investment which natural‑ ly reduces R&D budgets and limits vital innovation.

“It would be practically impossible for us to give any new work to GKN under such an ownership model when we don’t know who will be the long‑term investor.”

Airbus’s stance will dam‑ age sentiment around the bid from Melrose as the aircraft maker is GKN’S largest cus‑ tomer, accounting for a fifth of its aerospace revenues in 2017.

GKN also makes parts for Boeing 737 jets and the US mil‑ itary’s Black Hawk helicopters.

Earlier this week, GKN reject‑ ed the final £8.1bn takeover offer from Melrose, claiming that it fundamentally under‑ valued the company. GKN chairman Mike Turner said yesterday: “The comments from Airbus… emphasise our firmly held belief that Melrose is not an appropriate owner of GKN.

“Its management lacks the relevant experience and its short‑term business model is inappropriate.

“As we have previous‑ ly stated, and as these com‑ ments from Airbus reinforce, winning new business in our markets would be more diffi‑ cult if customers were uncer‑ tain as to the identity of their future long‑term partners.”

GKN has said it plans to merge its automotive business with US firm Dana in a $6bn (£4.4bn) deal.

However, Melrose chairman Christopher Miller hit back yesterday, insisting that the company invested in its busi‑ nesses for the long‑term.

He said: “We will be delighted to explain to all customers and stakeholders why Melrose’s ‘invest as if we were to own the business forever’ approach is the right way forward for GKN.

“We are certain that GKN’S new strategy of hasty short term business break up will not benefit the long term requirements of customers.”