Economy

GKN Denied The Bid From Melrose Industries

GKN Denied The Bid From Melrose Industries

GKN has lambasted turnaround specialist Melrose for making "misleading statements" as it stepped up a hostile bid yesterday, which the engineering giant rejected.

GKN said today that the 32 per cent premium claim was a false calculation because so much of Melrose's offer was based on the issue of new Melrose shares and because the value of those...

GKN rejected turnaround specialist Melrose's bid on Wednesday, saying that the terms of the paper-and-cash offer were "effectively unchanged" from a first private approach on January 8, which GKN also spurned.

A source close to GKN called the premium "illusory", adding: "We could leverage up our balance sheet and pay our shareholders from that - which is what Melrose is effectively doing".

"GKN's Board considers 32 percent to be a fake premium".

First, we had "fake news" and now, thanks to GKN PLC (LON:GKN), we have "fake premiums".

More news: Activision Blizzard, Inc. (NASDAQ:ATVI)

"We believe GKN's current owners should retain 100 per cent of the benefits of the clear upside potential in GKN, rather than handing 43 per cent of this upside to Melrose and its shareholders", said Anne Stevens, GKN's chief executive.

GKN shares were down 0.2% to 446.9p in mid-morning trade.

Shares in vehicle and plane part maker GKN rose by 1.3% on Wednesday morning, although they have subsequently lost most of that ground. It also told investors that it believed comments that its pension liability had increased were not accurate, while it also questioned Melrose's net leverage expectations.

Melrose, whose business model is to buy engineering companies, improve their margins and resell them, already owns diversified engineering firm Nortek and the Brush electricity generating equipment businesses.

The GKN board also contested what it saw as an implication from Melrose that GKN wanted a "hasty break-up" of its businesses.

"GKN is more than five times larger than any of Melrose's prior acquisitions by revenue".


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