GKN faces new £8.1bn Mel­rose bid in takeover bat­tle

Daily Nation Newspaper - - BUSINESS & CORPORATE - -BBC

Turn­around spe­cial­ist Mel­rose has in­creased its of­fer for UK en­gi­neer­ing gi­ant GKN from £7.4bn to £8.1bn.

GKN makes parts for Boe­ing 737 jets and Black Hawk he­li­copters, as well as parts for Volk­swa­gen and Ford cars.

It has fought hard against the bid, of­fer­ing to give back £2.5bn to share­hold­ers and agreed to merge its car unit with US com­pany Dana.

The takeover bat­tle has also en­tered the po­lit­i­cal arena, with some MPs call­ing for the bid to be blocked. GKN em­ploys more than 59,000 peo­ple, 6,000 in the UK alone. It be­came a takeover tar­get af­ter it is­sued profit warn­ings late last year.

Mel­rose said all re­cent at­tempts to en­gage in “con­struc­tive dis­cus­sions” with GKN had been blocked. It added that its lat­est of­fer was “fi­nal” and would “not be in­creased un­der any cir­cum­stances”. It is now of­fer­ing 467p a share, com­pared with Fri­day’s clos­ing share price of 435p. Mel­rose is also of­fer­ing to give share­hold­ers £1.4bn in cash as part of its of­fer.

It has also raised the amount GKN share­hold­ers would own in Mel­rose fol­low­ing the deal from 57% to 60%.

How­ever, in­vestors ap­peared unim­pressed by the lat­est move. Shares were up less than 2% in early trad­ing at 444p.

Re­becca O’Ke­effe, head of in­vest­ment at In­ter­ac­tive In­vestor, said: “The muted mar­ket re­ac­tion... is the strong­est in­di­ca­tion yet that Mel­rose might not get its way. “The ro­bust ef­forts GKN has taken to pro­tect it­self from the hos­tile bid, in­clud­ing the pro­posed dis­posal of its Driv­e­line busi­ness to Dana, com­bined with the com­ments from Mel­rose that their of­fer will ‘not be in­creased un­der any cir­cum­stances’ is lead­ing in­vestors to con­clude that GKN has won this bat­tle, at least for now.”

GKN said it was eval­u­at­ing the new bid and ad­vised share­hold­ers to take no ac­tion. It said it would pro­vide a re­sponse in due course.

Ear­lier on Mon­day, GKN had is­sued its lat­est de­fence. How­ever, this was based on Mel­rose’s pre­vi­ous of­fer, which it said was “op­por­tunis­tic” and “fun­da­men­tally un­der­val­ues” GKN’s prospects.

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