Shares in GKN (LON:GKN) have soared more than 26 percent in London today, as the company announced that it had rejected an unsolicited takeover bid from rival Melrose Industries (LON:MRO). The blue-chip group, which recently suffered a hefty writedown, further unveiled plans to separate its businesses.
As of 10:34 GMT, GKN’s share price had jumped 26.25 percent to 420.03p. The shares have boosted the benchmark FTSE 100 index which currently stands 0.14 percent higher at 7,773.73 points. Melrose’s share price has also advanced and is 6.56 percent better off at 229.10p.
GKN rejects Melrose bid
GKN announced in a statement today that it had received a preliminary and unsolicited takeover proposal from Melrose earlier this month. The cash-and-share offer valued the blue-chip group at 405 pence per share.
GKN explained that the board had unanimously rejected the proposal, having concluded that it “is entirely opportunistic and that the terms fundamentally undervalue the Company and its prospects”. According UK takeover rules, Melrose now can make a firm offer by February 9 or walk away for six months.
The takeover approach came after GKN sacked its new chief executive in November, weeks before he was due to take the helm at the blue-chip company, and warned of a further writedown at its North American aerospace division.
GKN further announced that Anne Stevens, its interim chief executive, would remain in the role permanently, and that the company was planning to split its aerospace and automotive businesses.
The BBC quoted Nicholas Hyett, an analyst at Hargreaves Lansdown, as commenting that the split had been ‘on the cards for years’ because there was little crossover between the two businesses.
“The money to be made from a split is likely to have been what drew turnaround specialist Melrose to the table in the first place,” the pointed out.