Having rejected a £7.4bn hostile takeover bid earlier this week, engineering giant GKN is now rejecting several of the key statements made by Melrose Industries at the time of the bid.
Melrose stated that the terms of its offer represented a premium of approximately 32% over the closing share price of GKN on the last business day prior to the approach.
The GKN board considers 32% to be a fake premium and points out that Melrose’s market capitalisation at the time of the bid was significantly smaller than GKN’s on the same day,
In a statement to the stock market GKN said: “Melrose is proposing to fund 80% of the offer consideration in shares and Melrose brings no industrial synergies. Instead, GKN’s shareholders are themselves funding the majority of this premium. The true, delivered premium is less than 11%”
The GKN board also contested what it saw as an implication from Melrose that GKN wanted a "hasty break-up" of its businesses.
GKN which makes wing tips for Airbus and parts for car manufacturers including Mercedes and Jaguar Land Rover, earlier this year said it intended to separate its aerospace and automotive units
In a statement today, the company said: “As clearly stated in GKN’s announcement (12 January), the timing of the separation will be determined by the need to maximise the economic benefits and minimise the costs associated with separation. The immediate focus of GKN’s new management is on executing Project Boost which aims to deliver a step change in cash generation and profit margin.”
GKN also disputes the claim by Melrose that it can replicate the operational improvements and generate shareholder returns consistent with what it has achieved previously with other businesses.
“GKN is a significantly larger business than any which Melrose has acquired in the past. GKN is more than 5 times larger than any of Melrose’s prior acquisitions by revenue. Melrose has very limited experience at Board level of managing Tier 1 aerospace and automotive suppliers”.
Anne Stevens, Chief Executive, GKN, said: “We believe GKN’s current owners should retain 100% of the benefits of the clear upside potential in GKN, rather than handing 43% of this upside to Melrose and its shareholders.”
She added: “We have already stated that the terms of Melrose’s offer fundamentally undervalue the Company and we are actively engaging with shareholders to explain how our transformation plan will provide value, whilst debunking some of Melrose’s inaccurate assertions.”