GKN rejects ‘opportunistic’ takeover offer as group plans to split business

ENGINEERING FIRM GKN has rejected as “entirely opportunistic” a takeover offer from turnaround specialist Melrose and set out plans to split its business to boost profitability.

The maker of components used in the Black Hawk helicopter and by automakers such as Volkswagen and Ford cut its profit outlook in October, hit by a writedown at its US aerospace division.

It later warned the writedown would be bigger than expected and announced the departure of CEOdesignate Kevin Cummings, the head of the aerospace division who had been set to take over the top job this month.

On Friday, the 259-year-old group named former Ford executive Anne Stevens as CEO, a role she has held on an interim basis since November.

It also set out her plans to separate GKN’s aerospace and automotive divisions to improve profitability.

The Melrose offer valued GKN at 405p per share. A source familiar with the matter said Melrose planned to continue to pursue its bid. The board of GKN said it had considered the proposal.

“We unanimously rejected it, having concluded that the proposal is entirely opportunistic and that the terms fundamentally undervalue the company and its prospects,” it said.

A downturn in GKN’s performance had reignited speculation it might separate its two divisions and restructure the business.

GKN has launched a wide-ranging review to identify why its profit margins and cash generation were coming in below expectations.