GKN sweats on result of Melrose takeover vote

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The slanging match over the £8.1bn hostile takeover bid of GKN should soon be over as a deadline expires for investors to vote on the bid.

Melrose Industries went directly to shareholders of the FTSE 100 engineering firm after its board snubbed the turnaround specialist’s advances.

The shareholders had until 1pm on Thursday to cast their ballots – with a bitter war of words between the two companies ringing in their ears.

:: The key questions in the Melrose bid for GKN

Melrose needs a majority of 50.1% to win the day and it is believed to be close.

It argues that shareholders have been failed by GKN for years and it could do better through a shake-up that would deliver better returns.

GKN – a company with roots going back to the Industrial Revolution – says its own path, which includes the sale of its Driveline auto business, will deliver better value for investors in the long term.

GKN
Video: Unite: Why GKN doesn’t want Melrose

The Melrose bid has met a wealth of concern from GKN customers, unions and politicians – worried it will mean the loss of jobs and investment cash, and that it will hit pensions.

GKN employs almost 60,000 staff worldwide.

Earlier this week, Melrose responded to a request for legally binding commitments from the Business Secretary in a bid to satisfy critics but its pledges failed to smooth the countdown to Thursday’s deadline.

GKN chairman Mike Turner said the promises were “drafted in increasingly hysterical language”, also claiming they smacked of desperation.

He added: “Over the last three months, it has become clear to GKN that Melrose’s attempts to engage with a broad group of GKN’s stakeholders – its customers, its employees, its pensioners, regulators such as CFIUS (Committee on Foreign Investment in the United States) and most recently the UK Government – have been hurriedly conducted and demonstrate a lack of care and preparation.

“Each one of these areas represents future risks that go to the value of the Melrose offer.”

Melrose insists its plans will not only improve GKN but also benefit the UK economy.

Lee Wild, head of equity strategy at Interactive Investor, said ahead of the deadline: “Melrose’s hostile bid for GKN has been the most bitter takeover battle in recent memory and is one that could well have a lasting impact on UK takeover rules.

“GKN has used everything in its arsenal to fight off turnaround specialist Melrose, but it’s still far from clear whether it will be enough.

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“What is certain is that this will go to the wire.”

He added: “A GKN victory is widely tipped to trigger selling of its shares, as Melrose backers bet that benefits take far longer to feed through than they would have done had the bidder won.”

From – SkyNews

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