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

Britney Spears to play Brighton Pride... and Scarborough

The pop singer is taking her Las Vegas show on tour in Europe

Driver behaviour 'transformed' by A90 average speed cameras

Surveys suggest average speed technology between Stonehaven and Dundee has dramatically cut speeding..

Neglect and abuse claims on rise in sheltered housing

UK councils receive more than 30,000 allegations of mistreatment concerning residents, the BBC learn..

Children in England 'deserve better' from healthcare

England has not made the same strides as Wales and Scotland to improve care, a report says

Sky-Fox deal not in public interest, says regulator

The regulator says the deal would give the Murdoch family too much control over news providers in th..

Travel chaos after gas leak shuts Charing Cross station

Roads are closed and Charing Cross station shut after a gas main ruptured just off Strand
View More

More Telford News

 Jimmy Armfield remembered: When England's World Cup squad trained in Shropshire

It’s not a view that would be associated with the modern day international..

 Volunteers sought by health watchdog in Telford

A health watchdog has won a contract to continue its work in Telford and W..

 GKN lifts sales forecast for electric car unit as it fights off Melrose hostile takeover

Engineering giant GKN, which employs more than 300 people in Shropshire, h..

 Top conductor leads school warm-up for classical concert - with video

A Shropshire school welcomed singers from across the Midlands to an ambiti..

 The Wrekin Housing Trust serves up partnership with Telford Tennis Centre

The Wrekin Housing Trust has celebrated its inaugural partnership with the ..

 Telford couple fined for fly tipping

A couple from Priorslee, Telford, have been fined £300 over the fly tipping..
View More

Telford Businesses

Calendar Countdown

[[countdown here]]
[[countdown here]]

Upcoming Events in Telford

22 Apr 2018

12 noon


Ride Out Entry £10.00 per bike including Festival entry (advance tickets only - register here)
Festival Entry £5.00 per person (under 16’s free)

View Details

26 May 2018

Farm Shop and Arthur’s Farm Kitchen: Tues – Sat 9.30am – 5.00pm and Sun 10.00am – 4.00pm

Open Bank Holiday Mondays: 10.00am – 4.00pm


Free entry Some activities and events are chargeable

View Details
View More