IAIN DEY AGENDAMarch 11 2018 12:01am The Sunday Times Iain Dey Whatever happens GKN will be broken up Iain Dey
Melrose has increased its hostile bid for GKN and told shareholders in the United Kingdom engineering firm that it will be its "final offer".
The final offer of ￡4.67 a share is valued at ￡8.1 billion (US$11 billion), Birmingham-based Melrose said in an open letter to GKN shareholders yesterday.
He said Melrose had gone directly to shareholders with its latest offer because the GKN board had rebuffed all recent attempts to engage in "constructive discussions".
GKN's board unanimously rejected the new bid on Monday saying it continued to fundamentally undervalue the company.
GKN said in its latest defense, 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.
Melrose said investors in GKN would under its new offer receive 81 pence in cash for every GKN share they hold, plus 1.69 new Melrose shares, keeping the cash part of the deal the same but upping the equity part from 1.49 new Melrose shares.
GKN, which makes parts for auto 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.
Christopher Miller, chairman of Melrose, called the offer a "bad deal".
MAJOR Isle of Wight employer GKN has received a new bid from Melrose in the ongoing takeover battle for the company.
Melrose is not the right owner of GKN. GKN shareholders will need to approve the merger, which means they will have to weigh its merits against a Melrose deal.
"It is our view that it is irresponsible of the GKN Board to proclaim a value maximising strategy whilst overburdening its only remaining business with liabilities of this nature", Miller said. It also forces GKN shareholders to accept shares in a United States firm which many would not be able to hold, and they also would have to pay tax on those Dana shares.
Last Friday, Melrose reported 5.8% of GKN's shareholders of had so far approved its original, lower hostile GBP7.4 billion takeover bid.
Melrose shares lost 3.4 percent to 217 pence, dragging down the value of the bid to 447 pence.
Shares in Melrose were down 4.9 per cent at the time of writing, while GKN's stock was down more than two per cent.