Engineering giant GKN rejects £7 offer

GKN

Shares in GKN, one of the uk’s biggest engineering companies, have been fired after they rejected an offer that values the company at £7.

Melrose made the unsolicited offer of 405p a share of 8 January.

Shares in GKN, which makes the tips of the wings for Airbus aircraft and parts for cars Porsche, jumped more than a quarter to 423p.

Its board said the cash and shares offer was “totally opportunistic” and “substantially” undervalued GKN.

Shares in Melrose, the manufacturing of back of the signature, also increased substantially, the addition of a 7% to 229p. Taking possession of the rules means that you must make a firm offer by the February 9 or walk away for six months.

The Liberal-Democrat leader Vince Cable called on Business Secretary Greg Clark to block the takeover: “GKN represents the long-term investment in advanced manufacturing, while Melrose are in the business of short-term financial engineering.”

‘Expansion of the footprint’

Last year, the lower the profit margins and cash generation prompted GKN to carry out a comprehensive review of its business. The company also warned on profits after finding problems in its aerospace division.

On Friday, he said a new two-year strategy called Project Increase significantly increase cash flow by reducing costs and expenses, together with the strict control of prices.

It also announced plans to split its aerospace and automotive, the division in two different companies, although the time has not been confirmed.

Nicholas Hyett, a senior analyst at Hargreaves Lansdown, said that the division had been “in the cards for years,” because there was little crossover between the two companies.

“Historically, the pension deficit has kept the group together, but with the expansion of the footprint is likely to have contributed to the recent profit warnings, the reasons for the divorce, they now appear to be higher than the costs of the division,” he said.

“The money of a division is likely to have been what drew her back from the specialist in Melrose to the table in the first place.”

GKN

GKN, said Friday that Anne Stevens, interim chief executive, would remain in the role permanently.

Kevin Cummings had originally been due to take up the role on 1 January, but in November, the company announced that it was looking for “an alternative leadership”.

The decision came after a £130 reduction in GKN’s aerospace division, Mr. Cummings had been running.

“Operational challenges” at its North America-based aerospace business were one of the factors behind a profit warning in the month of October.

The aerospace division was bolstered in 2009, when GKN bought Airbus wing manufacturing and assembly plant in Filton, near Bristol, and Fokker Technologies in 2015.

GKN

The origins of the company dates back to the Dowlais Iron Co, near Merthyr Tydfil in South Wales, in 1759. The city hardware supplied rails of railways in the uk and abroad, which is the largest in the world by the year 1845.

The Patent Nut And Bolt Company, founded in Birmingham, in 1856, it was merged with Dowlais in 1900 in a new group called Guest, Keen & Co.

Two years later, took most of Nettlefolds Ltd to be Guest, Keen & Nettlefolds.

GKN was very involved in the wartime production in the first half of the 20th Century, during which time the company made its first move in the emerging motor industry.

Melrose specialises in buying under-performing companies.

The company first listed in 2003 with a value of £13 million, but in the 15 years since then its value has soared. Today the FTSE 250 company is valued at almost £4.4 million euros.

Its acquisitions have included Dynacast, purchased the private equity firm Cinven in 2005 and sold six years later for four times its original investment.

In 2012 Melrose bought the utility metering company Elster for £1.8 bn, and sold it three years later to Honeywell by $ 3.3 million.

The past month of August, the firm acquired the american company Nortek for £2.2 million euros.