Tag Archive | "GKN"

GKN MELROSE: POLITICAL REACTION TO HOSTILE TAKEOVER

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GKN MELROSE: POLITICAL REACTION TO HOSTILE TAKEOVER


Melrose Industries has narrowly won its hostile takeover bid for GKN.

Following a ten-week battle that saw a war of words from GKN management as well as a number of alternative deals on the table, including a proposal from car parts maker Dana, the shareholders decided by a margin of 52 percent to sell to Melrose.

Despite assurances from Melrose, fears that the new buyer will simply wage a campaign of asset stripping as the takeover promises £8bn to be returned to shareholders, which will inevitably involve selling off parts of the business. Apart from car parts, GKN produces aviation components and has a number of defence contracts, leading to some speculation in the mainstream press that the deal might be stopped on national security grounds.

Business Secretary Greg Clark sought assurances from Melrose, saying that no company was ‘immune’ from takeover. Critics were keen to point out that such ‘assurances’ mean little in law, as was demonstrated when Kraft went back on promises made to Cadbury in 2009.

However, Defence Secretary Gavin Williams appears not to share Clark’s lasse-fare opinion, as he is reported as having ‘serious concerns’ about such a deal.

Former Defence Secretary [and owner of Haymarket Group] Lord Heseltine is quoted in the FT as saying that ‘no other country of our sort’ would allow the deal to go through.

Labour’s Jeremy Corbyn has said that the deal ‘must be stopped’ and that it does not make any sense ‘to put the interests of city speculators over the national interest’.

On completion of the deal, the Head Office in Reddich is tipped to be the first part of the operation to close.

 

 

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DANA MAKES BID FOR GKN

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DANA MAKES BID FOR GKN


U.S-based car parts maker Dana has made a bid for embattled engineering giant GKN.

A report in the FT says that Dana will offer $6bn for the drivetrain division and will consider opening a secondary listing on the London stock exchange.

GKN’s drivetrain business combined with Dana’s existing contracts would give shareholders 47 percent of the world’s biggest drive system supplier with annual sales of $14bn according to the paper.

Jim Kamsickas, Chief Exec of Dana was clear that the combination of the two firm’s strengths in road vehicle engineering was undisputable. “It would be impossible to poke a hole in this industrially” he said.

The new bid is in addition to the hostile offer to shareholders from Melrose Industries, previously reported on. The board of GKN has rejected the bid, but shareholders are currently considering it.

However, the Melrose bit is neither popular with the management, nor some key clients. Tom Williams, CEO of Airbus has been quoted as saying that it would be ‘impossible’ to work with the engineering company under a short-term business model.

“The industry does not lend itself to shorter term financial investment which naturally reduces R&D, budgets and limits vital innovation,” he told the Reuters news agency.

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GKN FIGHTS ‘OPPORTUNISTIC’ HOSTILE TAKEOVER BID

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GKN FIGHTS ‘OPPORTUNISTIC’ HOSTILE TAKEOVER BID


UK engineering company GKN is under threat from a hostile takeover from investment house Melrose Industries.  

Melrose  has made an unsolicited offer to shareholders to  acquire the entire issued share capital of GKN for 1.49 new Melrose shares and 81 pence in cash per share.

Melrose is known for turning engineering companies around and under the strapline ‘buy, sell, improve, sell’ it attempts to add value to the brands it acquires before selling them on, in a similar vein to a private equity. It’s website states it “finances acquisitions using a low level of leverage, improves the businesses by a mixture of investment and changed management focus, sells them and returns the proceeds to shareholders”.

However, the management of GKN do not want to sell to Melrose. In a letter to shareholders GKN Chairman Mike Turner blasts the approach as ‘entirely opportunistic’ and ‘low price and high risk’ before barbing: “Your board believes that Melrose is more focused on financial engineering than real engineering”.

“GKN is six times the size of Melrose’s largest acquisition and your Board believes that Melrose’s management team lacks relevant experience at Board level in several critical areas” wrote Turner, adding that he doen’t believe that Melrose has the necessary relationships with VMs and aircraft makers to make a success of the business. “Cars and aircraft are researched, designed, produced and serviced over several decades – your Board believes that a short term, private equity-style strategy is not the right way to provide sustained shareholder value in our sectors” he said.

GKN said in an earlier letter to shareholders that it would sell non-core assets and return £2.5bn to shareholders in response to the offer. 

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