Melrose ups offer for GKN, says latest bid final

by Abel Hampton March 15, 2018, 3:49
Melrose ups offer for GKN, says latest bid final

Shares in GKN (LON:GKN) have advanced in London this morning after Melrose Industries (LON:MRO) cranked up its hostile takeover offer for the British engineering group.

Melrose, a UK-based turnaround specialist, said that GKN investors would receive 81 pence in cash for each GKN share plus 1.69 new Melrose shares under its offer.

Last week, GKN, which specialises in making vehicle and plane components, announced a $6.1bn deal to merge its auto parts business with Dana Incorporate, an American company.

It described the board of GKN as attempting a hasty fire-sale of GKN businesses before they have been given a chance to reach their potential and "with damaging consequences, we believe, for all stakeholders".

It added that the merger gives Driveline an enterprise value, which includes debt, of $6.1 billion, based on Dana's closing share price of $26.20 on Thursday.

A letter, which was initiated by Labour MP Jack Dromey and Conservative MP Rachel Maclean, raised fears that GKN would be broken up and sold owners overseas. It also forces GKN shareholders to accept shares in a U.S. firm which many would not be able to hold, and they also would have to pay tax on those Dana shares.

"This transaction would involve a lengthy and uncertain completion process, including anti-trust clearances in the EU, US and China, as well as Dana's shareholder approval, which is not expected until the last quarter of 2018".

"GKN is one of the most prominent engineering firms in the United Kingdom, the third biggest in our country". "This brings a material increase in risk to the remaining group". It added that it was extending the offer until March 29.

It is not following up on any proposals because management remains focused on turning the business around, it said.

In response, GKN itself urged investors wait for its to complete a review of the bid. "GKN Directors will do the same in respect of their own beneficial shareholdings". Melrose's previous offer valued the engineering group at £7.3 billion.

Melrose shares lost 3.4 percent to 217 pence, dragging down the value of the bid to 447 pence.

GKN, which makes parts for vehicle companies and aircraft manufacturers, cited the impact of Melrose's share price fall on the value of the bid as a reason for spurning the offer.

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