Economy

The government has warned it may block Melrose's takeover of GKN

The government has warned it may block Melrose's takeover of GKN

GKN's board, in a separate statement, accepted defeat and asked shareholders of the company to accept the GBP8.4 billion takeover bid made by turnaround specialist Melrose Industries PLC.

GKN, led by chief executive Anne Stevens, had put up a staunch defence that included striking a separate deal to merge its autos division with US firm Dana, a tie-up that was dependent on the failure of the Melrose takeover.

Redditch-based GKN has almost 60,000 employees worldwide, and its Driveline division produces automotive components for major vehicle firms including BMW, Volkswagen and Volvo.

GKN's management said that Melrose's offer undervalued the firm but conceded defeat.

Yesterday, GKN shareholders voted to accept the offer from Melrose Plc.

Following the decision by shareholders of GKN to accept the offer from Melrose, mayor of the West Midlands, Andy Street, said: "The result of the vote by the shareholders of GKN is now known, however the real decisions on the future of the company are still to be made".

Chairman Christopher Miller states that Melrose is "delighted and grateful to have received support from GKN shareholders for our plan to create a United Kingdom industrial powerhouse with a market capitalisation of over £10 billion and a tremendous future".

The Melrose bid has met a wealth of concern from GKN customers, unions and politicians - anxious it will mean the loss of jobs and investment cash, and that it will hit pensions.

The turnaround specialist's motto is "buy, improve, sell", provoking fears among some lawmakers about the security of GKN's 6,000 British employees and the future of the engineer's pension schemes.

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Business Secretary Greg Clark has come under pressure to intervene in the deal amid concern expressed by MPs over asset stripping that could harm national security given GKN's defence industry role.

Meanwhile, the chief executive of Ohio-based Dana, James Kamsickas, said he was disappointed by the outcome.

But GKN - a company with roots going back to the Industrial Revolution - had claimed its own path, which includes the sale of its Driveline auto business, would deliver better value for investors in the long term.

Seeking to address such concerns, Melrose made a series of legally binding commitments about GKN's future this week.

It is possible that Dana could revive a deal for the business with Melrose in the future, a source close to GKN said. They included pledges on research and development expenditure and a promise the combined firm would remain headquartered in Britain.

"This assessment will be made by the appropriate authorities and the conclusion set out in due course".

"The first thought will rightly be what does this mean for GKN's workers, pensioners and suppliers".

"The takeover by Melrose makes a mockery of any talk by government of an industrial strategy", he said.


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