GKN steps up war of words with potential suitor
The war of words between GKN and potential suitor Melrose has been ramped up after the engineering giant accused the turnaround specialist of making “misleading statements”.
Clarifying comments made by Melrose in its initial £7bn bid offer on January 15, GKN said some of the claims being made were “fake”.
It said: “Melrose states that the terms of its offer represent a premium of approximately 32% over the closing share price of GKN on January 5, 2018, the last business day prior to the approach.
“GKN believes that this statement is misleading. GKN’s board considers 32% to be a fake premium. Melrose’s market capitalisation on January 5 was significantly smaller than GKN’s on the same day, Melrose is proposing to fund 80% of the offer consideration in shares and Melrose brings no industrial synergies.
“Instead, GKN’s shareholders are themselves funding the majority of this premium. The true, delivered premium is less than 11%.”
GKN also said Melrose had also implied that GKN wanted a hasty break-up of its businesses, including automotive and aerospace.
“This is not the case. As clearly stated in GKN’s announcement on January 12, the timing of the separation will be determined by the need to maximise the economic benefits and minimise the costs associated with separation,” it said.
“The immediate focus of GKN’s new management is on executing Project Boost which aims to deliver a step change in cash generation and profit margin.”
The Redditch-based manufacturer also took Melrose to task over its claims on operational improvements, pension liability and offer terms.
Melrose has since upped its offer to 7.4bn, although this has also been rejected.
However, one thing it said it did agree with Melrose on was the claim that GKN is comprised of world-leading businesses that offer “upside potential”.
Anne Stevens, GKN’s new chief executive, said: “We believe GKN’s current owners should retain 100% of the benefits of the clear upside potential in GKN, rather than handing 43% of this upside to Melrose and its shareholders.
“We have already stated that the terms of Melrose’s offer fundamentally undervalue the company and we are actively engaging with shareholders to explain how our transformation plan will provide value, whilst debunking some of Melrose’s inaccurate assertions.”
