‘Do not let these vultures destroy a British giant’

MPS and business chiefs last night blasted ‘corporate vultures’ trying to cash in on a hostile takeover of GKn.

Investors aim to make millions by forcing through the sale of one of Britain’s oldest engineering giants.

The firms from Mayfair and new York have been building large stakes in GKn to take advantage if it is bought by predator Melrose. As many as a quarter of GKn’s shares are now thought to be owned by at least five hedge funds – aggressive speculators which seek to profit from deals.

It means the future of the 259-year-old firm, which made Spitfires in the Second World War, could now rest in the hands of a band of ruthless investors with no longterm interest in the firm. A crucial shareholder vote on whether the takeover should go ahead – due by the end of Thursday – now hangs on a knife edge. One of the key players is feared US fund elliott, infamous for pursuing profit at all costs. It stands to make up to £16.5million.

GKn, based in Redditch, Worcestershire, makes car and aircraft parts and employs 60,000 globally. Critics fear Melrose will sell it piece-by-piece to foreign buyers if its £8.1billion bid succeeds, putting UK jobs and national security at risk.

Last night, Conservative MP Robert halfon said: ‘This is robber baron capitalism at its worst – many British jobs being destroyed by the few, corporate vultures plundering a company for short-term profits but long-term disaster.’

GKn boss Anne Stevens slammed hedge funds at the weekend, saying: ‘They could not give a c***.’ It came as it emerged that:

At least five hedge funds which own GKn stock are also betting Melrose’s share price will fall after the takeover goes through – meaning they will make even more money from the deal;

The funds have been buying into GKn using complex financial trading products which mean they pay less tax;

Melrose bosses were accused of encouraging long-term shareholders to sell up, giving the vulture speculators a chance to cash in.

Melrose must get the backing of just over 50 per cent of shareholders by Thursday afternoon if it is to take over control of GKn.

But British rules mean that investors can vote even if they bought their shares just days earlier. This allows speculators to snap up stock and vote at the last moment.

This not only gives them substantial sway over the vote, but means they can make millions of pounds in a very short period if the deal goes through.

Liberal Democrat leader Sir Vince Cable, a former business secretary, said: ‘This short-term speculation is damaging and totally contrary to the longterm perspective necessary.’

Sir John Parker, an industrialist and chairman of mining firm Anglo American, said: ‘If short-term shareholders want to go to the gambling table... that’s one thing, but they shouldn’t be able to influence the outcome.’

Melrose boss Simon Peckham – who stands to share a £285million bonus if the deal goes through – has been criticised for apparently encouraging the feeding frenzy. When the bid was announced in January, GKn shares rose and he seemed to encourage other investors to get out with a profit, opening the door for opportunistic hedge funds.

Mr Peckham said at the time that GKn shareholders can ‘elect to sell in the market right now for a substantial premium to Friday’s opening price or they can choose to combine their business with ours’.

Opponents of the takeover hit out last night. Labour MP Jack Dromey, whose constituency includes a GKn plant, said Melrose was ‘putting at risk the British national interest and a British icon for short-term financial gain’.

elliott, Melrose and GKn declined to comment.

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