Britain's Melrose raises GKN bid to $11.2 bln in final offer

14 Marcha, 2018, 04:00 | Author: Arnold Perez
  • IAIN DEY AGENDAMarch 11 2018 12:01am The Sunday Times Iain Dey Whatever happens GKN will be broken up Iain Dey

Melrose Industries PLC raised its hostile bid for GKN PLC by 9 percent in a last-ditch attempt to woo shareholders to its buyout proposal and reject a competing plan by the United Kingdom engineering firm to break itself up.

Over the weekend, GKN-which has two main divisions serving the aviation and automotive sectors-reached an agreement, subject to shareholder approval, to merge the latter with a U.S. counterpart, Dana in a $6 billion cash and shares deal.

A hedge fund investor, who has built a stake in GKN since the engineering company disclosed Melrose's bid in January, said he expected the new offer was high enough for Melrose to win GKN. Shareholders also would be entitled to receive the 6.20p final GKN dividend.

The FTSE 100 group's investors have until 13:00 GMT on March 29 to accept the current offer, which, Melrose noted, "will not be increased under any circumstances".

It said it study the new offer. Under the prior deal Melrose offered 1.49 Melrose shares in addition to the 81 pence in cash and dividend entitlement.

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On Monday, Melrose reiterated its belief that the Dana agreement was a "bad deal" for GKN shareholders in what it termed a "hasty fire sale". Further, at Melrose's midday Monday price of 215.70p, the revised offer was only worth 445.50p.

On Friday, GKN struck a £4.4bn deal to merge its automotive business with the USA firm Dana in an attempt to fend off Melrose.

In a letter to GKN shareholders, Melrose chairman Christopher Miller criticised its takeover target's management team for refusing to hold discussions over the offer and slammed recent moves by GKN to sell its Driveline business.

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. But if Melrose prevails, it will do so without undermining its own buyout criteria. Winning new business in our markets would be more hard if customers were uncertain as to the identity of their future long term partners. However, Melrose argued that many GKN investors would neither wish nor be able to hold USA stock.

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