GKN owner makes changes to culture and governance

Melrose, which bought GKN for £8bn in March after a protracted and fractious takeover battle earlier this year, has set about changing the two organisations as it integrates the engineering giant.

Christopher Miller, chairman of Melrose, will hand over to the current senior independent director Justin Dowley, who will become non-executive chairman from January. Miller will continue in a full-time role as executive vice-chairman.

Melrose is also looking to appoint an additional non-executive director and has said that search is ongoing.

Miller said: “Whilst we are still in the early days of our GKN ownership, significant progress has already been made.”

During the takeover, Melrose was critical of many aspects of the way GKN was run and it has already put in place some of its plans for the business.

“We moved quickly upon taking control to decentralise GKN and empower the operational management teams in accordance with the Melrose model,” said Miller. “This is the first step in the important cultural change that, alongside our operational investments, we consider is key to securing the improvements we believe are achievable for the world class GKN businesses.”

The update came alongside results for Melrose for the six months to June, which included “significant acquisition related charges” from the GKN deal but only 73 days of trading.

Its statutory results showed a pre-tax loss of £303m on revenues of £2.93bn, although its adjusted proforma results – which were produced as if GKN had been owned for the entire period – showed a pre-tax profit of £401m on revenues of £6.20bn.

Russ Mould, investment director at AJ Bell, said: “While arguments that part of the country’s engineering heritage had been sold off dominated the response of the media and politicians after Melrose Industries completed the £8.1bn capture of GKN earlier this year, the key concern for investors was that the company might have bitten off more than it could chew.

“First half results should go at least some way to allaying those fears as Melrose reports significant progress with its turnaround of the business.

“It is still early days though, and the company did not respond to speculation it was looking to sell off parts of GKN amid a wider break-up of the group.”