GKN faces £7.4bn hostile takeover bid from turnaround firm Melrose

GKN share price Melrose makes hostile bid for group

The FTSE 100 engineering group GKN is facing a hostile takeover bid after rejecting an initial £7bn approach by Melrose Industries.

The mixed cash and share offer values GKN at £7.4bn, or 430.1p per share, representing a 32% premium to the closing price on the 5 January, the day before the offer was made.

"We believe GKN's current owners should retain all the benefits of the clear upside potential in GKN, rather than handing nearly half of this upside to Melrose and its shareholders", said Stevens said in Wednesday's statement.

Simon Peckham, chief executive of Melrose said: "The real value uplift will come from merging the interests of the two sets of shareholders and creating a business valued at approximately £11bn today, of which GKN holders will own the majority".

GKN defiantly retorted with its own statement on Wednesday as it focused its energies on trying to convince shareholders to reject the Melrose offer.

Melrose is offering 1.49 of its own shares per GKN share, valuing each GKN share at 430.1p.

Melrose chairman Christopher Miller said: "Like GKN, Melrose is a United Kingdom company operating internationally". It says the deal would deliver "significantly greater benefits to the shareholders of GKN than GKN could otherwise achieve on its own".

"The real value uplift will come from merging the interests of the two sets of shareholders and creating a business valued at approximately £11bn today, of which GKN holders will own the majority, including Nortek, our United States business which is trading strongly".

GKN shares were up 0.4 percent at 443.9 pence after the announcement, while Melrose was down 1.5 percent at 230.9 pence at 0832 GMT.

Shares in auto and plane part maker GKN rose by 1.3% on Wednesday morning, although they have subsequently lost most of that ground.

Melrose has been seen as an aggressive hostile suitor, with its round of shareholder meetings this week a tactical move to ramp up its efforts to secure backing.

GKN, which has a market value of 7.6 billion pounds, stuck to its rejection of any deal on Monday, calling Melrose's earlier offer "opportunistic" and one that "fundamentally undervalues the company and its prospects".

Pension trustees have also waded into the takeover saga, warning on Tuesday over a £1 billion deficit in GKN's schemes and saying that any deal for the company would have to go through them first.

The news comes after GKN last week confirmed plans to split its aerospace and automotive divisions.

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