Shares in GKN (LON:GKN) have advanced in London in today’s session as the aerospace and automotive group turned down Melrose Industries’ (LON:MRO) bid. The turnaround specialist unveiled its formal hostile bid today, reaching out to the FTSE 100 group’s shareholders following a rejection by GKN’s board last month.
As of 10:18 GMT, GKN’s share price had added 1.10 percent to 427.46p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.03 percent higher at 7,535.98 points, pressured by a fall in heavyweights Royal Dutch Shell (LON:RDSA) and Vodafone (LON:VOD). Melrose’s share price meanwhile is 0.62 percent up at 227.80p.
GKN rejects ‘derisory’ bid
GKN announced in a statement today that it had noted the publication of Melrose’s formal offer, noting that it was unchanged from the turnaround group’s previous announcement and that it continued to view it ‘as entirely opportunistic’. The cash-and-share offer represents a total value of 418.3p per GKN share.
“This Offer is derisory. Melrose is trying to buy GKN on the cheap and with GKN’s own money, just at the point when our company is beginning to reap the benefits of its long-term investments,” GKN’s new chief executive Anne Stevens commented in the statement.
GKN, weakened by profit warnings in October in November, has said that it wants to separate itself into its automotive parts and aerospace divisions.
Melrose to ‘declutter’ group
Melrose, which specialises in buying companies which it thinks it can improve and sell for profit later, meanwhile noted in a letter to GKN’s shareholders that it did not intend ‘any hasty separation’ of the FTSE 100 group’s businesses. Instead, the turnaround specialist noted that it was planning to ‘declutter’ the business to drive improvement.