Engineering giant GKN rejects £7bn takeover bid

The UK-based engineer whose technology is used by Airbus and Boeing says the offer undervalues the firm.

GKN workers

Shares in GKN, one of the UK's biggest engineering firms, have soared after it rejected a bid that values the company at £7bn.

Melrose made the unsolicited offer of 405p a share on 8 January.

Shares in GKN, which makes wing tips for Airbus planes and parts for Porsche cars, jumped more than a quarter to 423p.

Its board said the cash and shares bid was "entirely opportunistic" and "fundamentally" undervalued GKN.

Shares in Melrose, a manufacturing turnaround firm, also rose sharply, adding 7% to 229p. Takeover rules mean it must make a firm offer by 9 February or walk away for six months.

Liberal Democrat leader Vince Cable called on Business Secretary Greg Clark to block the takeover: "GKN stands for long term investment in advanced manufacturing whereas Melrose are in the business of short-term financial engineering."

'Sprawling footprint'

Last year, lower profit margins and cash generation prompted GKN to conduct a wide-ranging review of its business. The company also warned on profits after uncovering problems at its aerospace division.

On Friday, it said a new two-year strategy called Project Boost would significantly increase cash flow by cutting costs and expenditure along with tighter pricing control.

It also announced plans to split its aerospace and automotive divisions into separate companies, although the timing has not been confirmed.

Nicholas Hyett, an analyst at Hargreaves Lansdown, said the split had been "on the cards for years" because there was little crossover between the two businesses.

"Historically, the pension deficit has held the group together, but with the sprawling footprint likely to have contributed to recent profit warnings, the reasons for divorce now seem to outweigh the costs of splitting," he said.

"The money to be made from a split is likely to have been what drew turnaround specialist Melrose to the table in the first place."

GKN said on Friday that Anne Stevens, its interim chief executive, would remain in the role permanently.

Kevin Cummings had originally been due to take up the role on 1 January, but in November the company announced it was looking for "alternative leadership".

The decision followed a £130m writedown in GKN's aerospace division, which Mr Cummings had been running.

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

The aerospace division was bolstered in 2009 when GKN bought the Airbus wing manufacturing and assembly plant at Filton, near Bristol, and Fokker Technologies in 2015.

The company's origins can be traced back to the Dowlais Iron Co, near Merthyr Tydfil in South Wales, in 1759. The town's ironworks supplied rails to railways in the UK and abroad, making it the world's largest by 1845.

The Patent Nut & Bolt Company, founded in Birmingham in 1856, was combined with Dowlais in 1900 in a new group called Guest, Keen & Co.

Two years later, it took over Nettlefolds Ltd to become Guest, Keen & Nettlefolds.

GKN was heavily involved in wartime production in the first half of the 20th Century, during which time the company made its first move into the emerging motor industry.

Melrose specialises in buying up under performing companies.

The firm first listed in 2003 with a value of £13m, but in the 15 years since then its value has rocketed. Today the FTSE 250 company is valued at almost £4.4bn.

Its acquisitions have included Dynacast, which it bought from private equity firm Cinven in 2005 and sold six years later for four times its original investment.

In 2012 Melrose bought utility metering firm Elster for £1.8bn and sold it three years later to Honeywell for £3.3bn.

Last August the firm acquired US company Nortek for £2,2bn.




Date: 12 January 2018 | Source: BBC

More UK News

Pharmacists warn of a 'surge' in shortage of common medicines

Patients in England are struggling to get hold of drugs such as painkillers and anti-depressants

Police plan dig in hunt for Mary Duncan missing 43 years

Detectives plan to excavate land in the search for a young mum who vanished almost 43 years ago, BBC..

Coventry council 'slowest to fill potholes'

Some councils aim to fill potholes within minutes but others take more than a day, new figures show..

Banksy artwork in Port Talbot sold for 'six-figure sum'

Season's Greetings will remain in Port Talbot for "two to three years" as it is bought by a gallery..

Wakefield, Grimsby, Plymouth win share of £20m culture fund

Five areas in England will benefit from a new Cultural Development Fund to boost local culture

'My son's severe asthma is very distressing'

Every three seconds in the UK, someone has an asthma attack which could be life-threatening, a chari..
View More

More Telford News

 MP's warning over Broseley's Broxit move

Broseley Town Council has been told it cannot choose to complete a "Broxit..

 Future Fit: A&E recommendation rubber stamped

Health officials have confirmed their choice of Royal Shrewsbury Hospital ..

 Row over key document in Shropshire's Future Fit discussions

A row has broken out over a key document in Shropshire's Future Fit discus..

 Four admit role in violent family fracas in Telford

The trial of seven men accused of leaving two people with serious injuries..

 There is no place for Future Fit says leader of Telford & Wrekin Council

The Leader of Telford & Wrekin Council is calling on health bosses to ..

 Former coronary care nurse takes top business role at UK medical supply firm

A former coronary care nurse has taken a top role with one of the UK’s lead..
View More

Telford Businesses

Calendar Countdown

Upcoming Events in Telford

19 Jan 2019

Saturday 19 January 7.30pm


Tickets £25

View Details

25 Jan 2019

Friday 25 January 7.30pm


£22.50

View Details

31 Jan 2019

Thursday 31 January 7.30pm


Tickets £23

Concession £21.50

View Details

09 Feb 2019

Saturday 9 February 7.30pm


Adult: £26.50

Concessions: £23.50

View Details
View More