PARIS • Melrose Industries plc made a hostile £7.4 billion (RM40.37 billion) bid for GKN plc, which spurned the approach, setting up a battle to win shareholder support for the deal or the aviation supplier’s own plan to break itself up.
The offer values GKN at 430.1 pence a share in cash and stock, Birmingham, England-based Melrose said in a statement yesterday. After rejecting an initial approach on the same terms last week and announcing a breakup plan, GKN reiterated yesterday the offer undervalued the firm.
Melrose, an investment company that specialises in turning around industrial companies, said it acted after meeting this week with shareholders in Redditch, England-based GKN, a key supplier to Airbus SE and Boeing Co. The firm bid will add to the pressure on the target to come to the table and negotiate a deal.
GKN CEO Anne Stevens and finance director Jos Sclater are now meeting investors to shore up support for their strategy. Shareholders should profit from all of the “clear upside potential in GKN, rather than handing almost half of this upside to Melrose”, the firm said in a statement.
The planned breakup would separate GKN’s autos unit, which makes drivetrain components, from the more profitable aerospace division. The group also has metallurgy and land-systems divisions. With the announcement last week, GKN named Stevens to the CEO job on a permanent basis.
Vulcan Value Partners, a GKN shareholder, told the Financial Times this week that it favours talks with Melrose. — Bloomberg