GKN reject takeover bid that values the company at £7bn


Shares in GKN (LON:GKN) have soared more than 26 percent in London today, as the company announced that it had rejected an unsolicited takeover bid from rival Melrose Industries (LON:MRO). In 2015, Slaughters acted for the company on a £200m shares placement.

The announcement came as the company appointed Anne Stevens as chief executive and announced its intention to restructure the business.

The offer comes at a delicate time for GKN, which said in November it was firing its incoming chief executive officer before he even started amid mounting write-offs related to a troubled aerospace plant in Alabama.

Accompanying this decision is a two year initiative (Project Boost) to improve cash and profit in both parts of the business.

The Board of GKN has considered the Proposal together with its financial advisers, Gleacher Shacklock, J.P. Morgan Cazenove and UBS Limited, and has unanimously rejected it, having concluded that the Proposal is entirely opportunistic and that the terms fundamentally undervalue the Company and its prospects.

A potential offer would take the form of 80 percent stock and 20 percent cash, and current GKN owners would end up with about 57 percent of the enlarged group, Melrose said.

Hyett said: "A takeover offer, subsequent rejection, new CEO, transformation strategy, trading update and planned separation of the business all in one go - it's hard to describe GKN as a Mondeo now!"

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

GKN's share price jumped as much as 30 per cent to 433.9 pence on Friday while Melrose gained 5 per cent - raising the value of its bid to 415 pence or £7.1 billion.

The firm issued a profit warning in October over problems at its aerospace division. The group also has metallurgy and land-systems divisions.

In November, the company announced that its CEO designate Kevin Cummings was leaving the company with immediate effect following a profit warning brought about by difficulties on United States aerospace operations.

GKN confirmed its position as a major supplier of jetliner wing, tail and fuselage components with the purchase of an Airbus plant in Filton, England, in 2008.

Technology company Smiths Group rallied 3.4 percent.

Melrose, valued at £4.16 billion at the close on Thursday, specialises in buying companies that it can improve through investment and cost cuts with the aim of selling them at a profit.

The company said August 31 it had been busy exploring potential acquisitions over the summer of 2017.

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