Melrose Industries (LON:MRO) is facing fierce pressure to reveal legally binding commitments to protect jobs and invest in research and development as it looks to acquire GKN (LON:GKN), The Times has revealed. The report comes after it emerged earlier this week that MPs had urged the business secretary to block the proposed hostile takeover of the blue-chip automotive and aerospace engineer.
GKN’s share price has lost ground in London this morning, having given up 0.52 percent to 418.90p as of 09:45 GMT, underperforming the benchmark FTSE 100 index which currently stands at 7,146.50 points, flat in percentage terms. Melrose’s share price meanwhile has fallen deep into the red and is currently 1.80 percent worse off at 213.20p.
Melrose under pressure over GKN bid
The Times reported this morning that Melrose’s chief executive Simon Peckham was forced to make concessions with MP’s on the business, energy and industrial strategy committee questioning the turnaround specialist’s commitment and track record for growing British businesses. Melrose is currently locked in a hostile takeover battle with GKN, one of Britain’s largest and oldest engineering groups.
Yesterday’s select committee session was called amid growing fears that a takeover of GKN could lead to the loss of jobs, damage British industry and the country’s industrial strategy, and even put national security at risk.
Turnaround group to outline ‘formal undertakings’
The Times reported that Peckham had promised to write to the parliamentary committee within a week to outline what potential ‘formal undertakings’ – or legally binding promises under the Takeover Code — Melrose might make should it succeed in its pursuit of GKN.
The FTSE 100 engineering giant, which has rejected the bid, meanwhile is looking to split into two divisions and has been in talks with US-based Dana about selling its automotive business.