UK engineering giant stated it ‘continues to fundamentally undervalue’ the business
Just hours after turnaround specialist Melrose increased its hostile bid for GKN to £8.1bn, it has now emerged that the UK engineering giant has rejected the new bid saying the revised offer “continues to fundamentally undervalue GKN”.
Melrose — which specialises in buying struggling businesses — had earlier issued a “final” offer for GKN of 467p per share, having previously offered £7.4bn.
Mike Turner, chairman of GKN, stated: “The board believes that Melrose’s revised offer continues to fundamentally undervalue GKN and has no hesitation in unanimously rejecting it.
“Shareholders should be aware that Melrose is asking them to accept its acquisition paper at 22x 2017 earnings, in exchange for world class businesses which Melrose’s offer only values at 14x 2017 earnings.
Melrose is not the right owner of GKN. Its management lacks relevant experience and its short term business model is inappropriate for GKN’s customers and its investors. Winning new business in our markets would be more difficult if customers were uncertain as to the identity of their future long term partners.
“Over the past few weeks, we have demonstrated how much we can achieve for our shareholders. We ask for shareholders’ support as we continue with the transformation of GKN. Give us the opportunity to finish the job. Reject Melrose’s offer.”
Based in the Midlands, GKN employs 58,000 people in 34 countries and has grown into a £9.4bn business.
Leave a Comment