GKN faces new £8.1bn Melrose bid in takeover battle
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.