GKN rejects £7bn takeover bid

GKN has rejected an “entirely opportunistic” bid for the group by industrial investor Melrose.

The proposal valued GKN at around £7bn, although 80% of the deal would have been paid in Melrose shares.

GKN has also appointed Anne Stevens as its chief executive and confirmed plans to separate its aerospace and automotive businesses.

Melrose’s 405p-per-share offer was at a 24% premium to GKN’s share price when the offer was made. GKN’s shares shot up to around 400p when the markets opened in response to the takeover bid. Melrose’s share price also rose, gaining 10% in early trading.

The “preliminary and unsolicited proposal” was received on Monday and after consideration was unanimously rejected by the GKN board.

Melrose is a Midlands-based manufacturing turnaround specialist. In 2016 it sold Elster to Honeywell International for £3.3bn, and went on to spend £1.1bn later that year for US-based Nortek.

However GKN believes the terms of its takeover bid – which would see only £1.4bn paid in cash – “fundamentally undervalue the company and its prospects”.

Redditch-based GKN, which is one of the West Midlands’ largest public companies, had a tough end to 2017.

In October the manufacturing group informed investors of unspecified claims totalling £40m that was expected to hit its profits this year. The news caused its share price to plummet, wiping off £400m from its value in one day.

A writeoff of up to £130m was revealed in November, while its chief executive and finance director have departed.

GKN has today confirmed the permanent appointment of Anne Stevens as chief executive.

Her appointment follows the aborted selection of Kevin Cummings, who was going to be promoted from his role as chief executive of GKN’s aerospace division, but left the company six weeks before he was due to take on the role.

GKN chief executive Anne Stevens

Stevens, who has been a non-executive director for eight years, was then named as interim chief executive to replace Nigel Stein from January 1, before being permanently appointed.

She believes the group can “deliver more for our shareholders”.

She said: “GKN is a world leader with the potential to perform even better. We have been working extensively over the past few months to develop detailed cash and profit improvement plans.

“I am relishing the challenge of delivering that potential with a new group-wide improvement programme underway.”

The transformation programme, known as Project Boost, has been in response to profit margins and cash generation coming in below expectations. It will implement three different strategies -improve, grow, develop – for its core products.

GKN will also begin to separate its aerospace and automotive businesses and said it will provide further details of how it intends to achieve that in the future.