GKN rejects final £8.1bn offer

Engineering giant GKN has rejected a final £8.1 billion takeover offer from Melrose Industries, saying it “continues to fundamentally undervalue” the business.

Yesterday morning suitor Melrose raised its offer from an initial £7.4bn in a new cash-and-shares deal which it said represented an “attractive immediate premium” of 43 per cent on GKN’S closing price on 5 January at 467p per share.

But late yesterday afternoon GKN chairman Mike Turner said: “The board believes that Melrose’s revised offer continues to fundamentally undervalue GKN and has no hesitation in unanimously rejecting it.

“Melrose is not the right owner of GKN. Its management lacks relevant experience and its short-term business model is inappropriate for GKN’S customers and its investors.

“Winning new business in our markets would be more difficult if customers were uncertain as to the identity of their future long-term partners.”

The comments came after Melrose chairman Christopher Miller hit out at the takeover target’s efforts to fight off the hostile bid, particularly GKN’S recent agreement to merge its automotive business with US firm Dana in a $6.1bn (£4.4bn) deal.

GKN announced the terms of the Driveline deal last week, which would see Dana shareholders own 52.75 per cent of the company and GKN the remainder, with the combined company set to be domiciled in the UK but traded on the New York Stock Exchange. Turner yesterday asked investors to have faith in the plan.

“We ask for shareholders’ support as we continue with the transformation of GKN,” he said.