Melrose increases offer for GKN to £8.1bn

Eileen GuzmanMar 14, 2018

But Melrose declared its sweetened offer as "final", meaning it can not improve the terms further under British takeover rules. "GKN Directors will do the same in respect of their own beneficial shareholdings". This is "final" offer time from Melrose chairman Christopher Miller - an aggressive riposte to Friday's news that, to save itself from the British raider, GKN would flog its Driveline automotive wing to America's Dana.

Melrose noted that its new offer represents a 43% premium to the 326.3 pence closing price of GKN on January 5, the day before its initial approach to GKN was announced. Melrose shares tumbled 3 percent.

In addition, the group is now offering 467 pence a share, as well as offering to give shareholders £1.4 billion in cash.

Within hours, the increased bid was rejected by GKN.

Melrose is not the right owner of GKN.

GKN last week agreed to sell its automotive unit to USA -based Dana a $6.1 billion transaction aimed at repelling Melrose.

GKN's chairman, Mike Turner, wrote to investors on Monday to point out that Melrose "lacks experience in several critical areas and that its priorities are inappropriate for running a global technology-based business like GKN".

The engineering group said on Monday it believed it would be worth 503 pence a share given its plans for improving the company.

As of 08:11 GMT, GKN's share price had added 1.75 percent to 442.70p, outperforming the benchmark FTSE 100 index which now stands 0.18 percent higher at 7,237.72 points.

But on Monday Melrose said that it thought that tie-up was "hasty and ill-thought-through".

GKN said in its latest defence, also published on Monday, that shareholders would be invested in a more profitable GKN Aerospace following the sale of Driveline and powder metallurgy, plus have holdings in the merged GKN-Dana company.

But it was left vulnerable to predators after two profit warnings late past year, caused by problems at its US aerospace business.

"GKN is one of the most prominent engineering firms in the United Kingdom, the third biggest in our country".

GKN employs around 6,000 people in Britain - about 10 percent of its workforce.

GKN has issued a statement saying it "notes the announcement made earlier today by Melrose Industries".

Melrose told lawmakers earlier in March that it would consider making binding commitments about the future of GKN should its bid succeed.

Rebecca O'Keeffe, head of investment at Interactive Investor, said: "The muted market reaction of the GKN share price to the increased offer of 467p by Melrose is the strongest indication yet that Melrose might not get its way and that GKN's management and their Project Boost strategy is winning".

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