GKN Rejects Melrose Offer; To Separate Businesses; Names Stevens CEO; Stock Up

GKN Rejects Melrose Offer; To Separate Businesses; Names Stevens CEO; Stock Up

Also included in the statement issued today reveals plans to split the aerospace and automotive divisions into separate companies, and that Anne Stevens, now Interim Chief Executive, agreeing to become the Group's new Chief Executive with immediate effect.

The automotive and aerospace parts manufacturer confirmed in an update on Friday that it had received a "preliminary and unsolicited proposal from Melrose" on 8 January worth 405p per share, a 24% premium to its closing price on 5 January of 326p. Those calls became louder after a profit warning in October, which was sparked by the difficulties at its aerospace business.

GKN's shares jumped by more than a quarter to an all-time high of 420p on the news, above the initial 405p cash and share offer on the table from turnaround specialist Melrose.

The bid was rejected, but GKN promptly admitted that it would now start the process of a demerger.

After becoming interim chief executive in late 2017, Anne Stevens has been permanently appointed to the post.

GKN also announced that Anne Stevens, now its interim chief executive, has agreed to take over as the group's new chief executive with immediate effect.

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Its board, in tandem with financial advisers Gleacher Shacklock, JP Morgan Cazenove and UBS, "unanimously rejected" the proposal, which it deemed "entirely opportunistic" and to "fundamentally undervalue" the company and its prospects.

Ms Stevens, who at 69 has extensive experience in the aerospace and automotive sectors, said she would instill a much stronger performance and accountability culture at the group, which employs 58,000 people across 30 countries. "What it hasn't done is generate enough cash from those market positions", one person familiar with the company said. "I am relishing the challenge of delivering that potential with a new group-wide improvement programme underway".

It said both businesses would benefit from being separate companies with distinct investment profiles and capital allocation policies.

It said: "The board will communicate further details on the optimal method of separation in due course".

Assistant general secretary for manufacturing, Tony Burke, said: "The only interests this predatory takeover bid are in, are those of the speculators looking to turn a quick buck".

In accordance with the UK's takeover rules, Melrose has until 5.00pm on 9 February 2018 to counter with a new offer for GKN.

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