One of the City’s top institutional investors has backed Melrose Industries’ (LON:MRO) proposed hostile takeover of GKN (LON:GKN), The Times has reported. The news comes after the engineering group rejected the turnaround specialist’s improved and final offer yesterday.
GKN’s share price has surged in London this morning, having added 1.77 percent to 431.60p as of 08:26 GMT. The stock is outperforming the broader UK market, with the FTSE 100 having slipped marginally into the red and currently standing 0.07 percent lower at 7,210.08 points.
Top investor backs Melrose
The Times reported this morning that Aviva Investors, a top 25 shareholder in GKN, had said that it would support Melrose, which has launched a hostile takeover offer for the engineering group.
“We favour Melrose’s proposed measured execution of value rather than GKN’s reactive review of business structure,” David Cumming, chief investment officer at Aviva, which owns just over one percent of GKN and five percent of Melrose, commented, as quoted by the newspaper. “Consequently, we believe the interests of shareholders in both companies are best served by accepting Melrose’s raised bid.”
The Times further noted that while Aviva was the first investor to make its position known publicly, shareholders accounting for between five and six percent of GKN were understood to support Melrose’s improved offer.
GKN rejects latest offer
The FTSE 100 group meanwhile rejected Melrose’s improved offer, which is final and binding under the UK Takeover Code.
“The Board believes that Melrose’s Revised Offer continues to fundamentally undervalue GKN and has no hesitation in unanimously rejecting it,” Mike Turner, Chairman of GKN, commented in a statement, urging the FTSE 100 group’s shareholders to also reject the bid.
Melrose announced its increased offer yesterday after GKN unveiled plans last week to its merge its automotive division with Dana.