Melrose’s New £8bn Hostile Bid for GKN Rejected as Merger Deal with Dana Continues

Melrose has declared a “final” offer of £8.1 billion for UK engineering giant GKN as a culmination of its efforts to acquire the company which started back in January. GKN has strongly urged its shareholders to reject the offer from Melrose, with the backing of Unite, Britain’s largest trade union. Melrose is seen by its critics as an asset-stripper.
The new bid from Melrose is an increase from its initial offer of £7.4bn, worth 442p and 424p per share respectively. The new bid, in actual terms for current investors, means they will receive 81p in cash for every share held, plus 1.69 new Melrose shares.
Melrose’s interest in GKN peaked after GKN issued profit warnings in October and November last year, created by problems in its aerospace division.
GKN’s aerospace interests include supplying parts for the F-35 fighter jet, the Airbus A400M military turboprop plane, the Eurofighter Typhoon and the Black Hawk military helicopter.
According to Steve Turner, the assistant general secretary of Unite, which has been campaigning against Melrose: “Melrose’s self-professed short-term approach of breaking companies up and selling parts quickly on, raises major concerns for UK defence interests and works against the long-term projects that GKN Aerospace is involved in.”
In an attempt to strengthen the company, GKN announced last Friday that it had agreed a US$6.1bn merger of its automotive Driveline division with the American, Ohio-based Dana, which produces axels and driveshafts. In addition, the intention would be to sell off GKN’s powder metallurgy business so that it could concentrate on aerospace.
If the deal is successful, Dana would become a UK public limited company, but remain headquartered in Ohio with its shares traded on the New York stock exchange.