GKN rejects £7bn hostile takeover bid and plans to split in two

Elias Hubbard
January 13, 2018

A surge in the shares of GKN has helped drive the FTSE 100 to a new all-time high afer the troubled engineering group rejected a takeover approach from rival Melrose.

The company said: "The Board of GKN has considered the Proposal... and has unanimously rejected it, having concluded that the Proposal is entirely opportunistic and that the terms fundamentally undervalue the Company and its prospects".

In accordance with the UK's takeover rules, Melrose has until 5.00pm on 9 February 2018 to counter with a new offer for GKN.

It added that the proposal would have diluted the exposure of shareholders to "meaningful upside opportunities".

Melrose, by contrast, says the deal would deliver "significant operational and commercial benefits" and reverse "a history of existing GKN management not delivering on margin target".

The offer valued GKN at 405p per share and comprised 81p in cash per share with the remainder made up of Melrose shares.

It added: "The timing of the separation will be determined by the need to maximise the economic benefits and minimise the costs associated with separation".

Bovis said it expected a stronger year in 2018
Bovis said it expected a stronger year in 2018

The programme is aimed at optimising procurement, processes, productivity and capital allocation. The company plans to differentiate product segments into core and non-core and subequently expects to divest its non-core product segments.

Stevens, the former Chairman and CEO of U.S. alloys manufacturer Carpenter Technology Corp, became interim chief executive of the company earlier in January following the retirement of Nigel Stein. She has previously served as chief executive of speciality metals producer Carpenter Technology and as a senior executive at automotive manufacturer Ford.

The group said Stevens has been leading an ongoing and wide-ranging internal review of all GKN's businesses which has culminated in the development of a transformation plan to improve significantly performance.

Stevens declares herself "confident that we can deliver more for our shareholders while improving what we do for our customers and supporting our employees".

For 2017, the company continues to expect management pretax profit to be slightly ahead of GBP678 million recorded in 2016, before additional Aerospace write-offs announced in November a year ago.

However, the 2017 pre-tax profit does not take into account a working-capital write-off signalled in November.

"Operational challenges" at its North America-based aerospace business were one factor behind a profit warning in October.

Other reports by Click Lancashire

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