The fight is not over: GKN rejects new hostile bid valued at US$ 11.12 billion

13 March, 2018

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After GKN agreed to merge its automotive division with Ohio-based auto supplier Dana Incorporated, Melrose Industries PLC, the company behind a hostile takeover for the UK-based manufacturer, announced it has increased its bid to £ 8 billion (around US$ 11.12 billion) on Monday, but the offer was also turned down.

The offer of 467 pence a share would give current GKN investors a 60% stake in Melrose, the investment firm said in a statement. But GKN officials said their own plan, which includes the merger of the automotive division with Dana, will generate more than 500 pence a share in value.

GKN also said it already had approaches for its aerospace operations that were above the current share price, but added that it had rejected them because of the potential it saw in the unit that makes components for Airbus.

However, David Cumming, chief investment officer for equities at Aviva Investors, which is a large investor in both GKN and Melrose, indicated it would accept the improved cash and shares bid.

Investors have two weeks to decide whether to take the cash-and-stock offer or stick with GKN’s plan to sell off its automotive unit and focus on aerospace. Last week, GKN agreed to combine the driveline business with Dana Inc. in a US$ 6.1 billion transaction.

Melrose called that plan a “hasty fire-sale” and a “bad deal”, as many investors won’t be able to hold the shares being offered as part of the automotive deal, it said.

Christopher Miller, the Melrose chairman, said his company had little choice but to go direct to shareholders with the revised offer because the GKN board had rebuffed all recent attempts to engage in “constructive discussions”.

Melrose identifies itself as an investment firm that “buys good manufacturing businesses which are underperforming their potential, invests in them to improve their performance and returns the value to shareholders when sold.”

GKN established operations in Mexico with the production of CVJ Systems in Celaya, Guanajuato in 1979. A second site is located in Villagran, Guanajuato which opened in 2006 and both sites have been expanded in recent years.

GKN Aerospace currently has four sites in Mexico manufacturing airframe and engine structures. Two of those facilities are located in Mexicali, one in Chihuahua and another one in San Luis Potosi. GKN currently employs over 2,000 people across these six sites.

MexicoNow