Melrose may ease hostilities by raising GKN bid
CORPORATE raiders at Melrose could return this week with a higher takeover offer for GKN after the company’s hostile £7.4billion bid for the engineering giant was rejected.
City analysts expect Melrose to raise its bid to win over the FTSE 100 firm, which makes parts for cars and planes.
Melrose, led by Lord Hanson’s protege Chris Miller, can from Thursday post its offer document to GKN’s shareholders. Once it has done that, Melrose can sweeten its initial cash and shares bid which GKN said undervalues it.
One analyst told The Mail on Sunday: ‘I feel they will raise the offer and I feel that may be all about the greater good of both parties in the long run.
‘Hostility isn’t particularly appropriate when you want to ensure the smooth running and longevity of businesses like GKN’s. So there may well be a need – and a very sound need – for the offer to go up in an attempt to gain acceptance.’
One of the main hurdles is GKN’s £1billion pension deficit. Trustees intervened and told Melrose that they would have to draw up plans to fix the pension deficit before any offer can be accepted.
Questions were raised last week about the trustees’ independence. The trustees of the two pension funds are former GKN staff.
GKN, which installed Anne Stevens as its permanent chief executive earlier this month, laid out plans to separate its automotive and aerospace divisions after Melrose’s approach.
Last week, The Mail on Sunday revealed the top four bosses at Melrose – including executive chairman Miller and chief executive Simon Peckham – stand to make hundreds of millions of pounds if they pull off a deal for GKN thanks to lucrative share bonuses put in place last year.