Melrose set to keep tight grip on GKN spin-off

MELROSE is planning to keep a tight hold on the reins when it spins off GKN’s automotive business onto the London Stock Exchange in the spring, the Mail can reveal.

The demerger will be the latest move by Melrose – which buys struggling industrial companies, improves them and sells them on – after it snapped up engineering giant GKN for £8.1bn in a viciously fought takeover in 2018.

Melrose’s pursuit of GKN, which traces its roots back to the industrial revolution, had been the biggest hostile takeover battle since Kraft’s move on Cadbury a decade earlier.

Since then Melrose has restructured the business, including the closure of GKN’s automotive engineering plant in Birmingham with the loss of 500 jobs in 2021.

The Erdington site was renowned for making driveline systems for the car industry, with customers including Jaguar Land Rover.

The late Jack Dromey, then the local Labour MP, described the closure as a ‘hammer blow’ for Erdington, one of the UK’s most deprived areas.

In another twist in the saga, Melrose now plans to split GKN’s aerospace operations from the automotive business to float the latter on the London Stock Exchange in April, renaming it Dowlais.

The name Dowlais is a nod to the village in south Wales which was home to the industrial revolution- era iron and steelworks of the Guest family, one of the founders of the original Guest, Keen and Nettlefolds, later renamed GKN.

The new company will be led by Liam Butterworth, appointed by Melrose to run GKN Automotive in 2018.

‘ The hard work and the restructuring has been done,’ according to a source at GKN.

But investors hoping for a clean break will be disappointed. The Daily Mail can reveal that Simon Peckham – the founder and chief executive of Melrose and architect of the GKN deal – and his finance director Geoffrey Martin will both become non- executive directors in the newly floated firm, with Melrose also retaining a 3pc stake.

‘We don’t want to lose their know-how,’ the source added.

The demerger was announced in September and a prospectus for Dowlais is due on March 3 ahead of the listing the following month. The float is expected to be one of the biggest on the London Stock Exchange this year, with annual revenues of £5.2bn.