GKN top 30 shareholder plans to reject Melrose bid

Steve Davies of Jupiter Asset Management prefers plan put forward by GKN’s management

GKN’s headquarters in Redditch, England: GKN’s   campaign to fend off bid, currently worth about £7.8bn (€8.8bn), was boosted on Thursday. Photograph: Hannah McKay/Reuters

GKN’s headquarters in Redditch, England: GKN’s campaign to fend off bid, currently worth about £7.8bn (€8.8bn), was boosted on Thursday. Photograph: Hannah McKay/Reuters

 

A top 30 shareholder in British engineering company GKN plans to reject a hostile takeover bid from industrial turnaround specialist Melrose, the latest voice to back GKN as the bid battle intensifies.

Steve Davies, head of strategy, UK growth, at Jupiter Asset Management, said that he preferred the plan for adding value put forward by GKN’s management.

“I don’t see the need to dilute this value creation by accepting the Melrose proposal, which also brings with it pension risk, balance sheet concerns and potential issues with how GKN’s customers might react to the change of ownership,” Davies said on Friday. Jupiter is a top 30 investor in GKN with a stake of just under 1 per cent.

GKN’s campaign to fend off the bid, currently worth about £7.8 billion (€8.8 billion), was boosted on Thursday when top customer Airbus said it could not guarantee new work to a new owner with a short-term perspective.

Melrose is seen by some to be a short-termist owner as its model is to break up companies once it has improved them, although it says it takes a long-term view on investment.

The deadline for GKN shareholders to accept Melrose’s offer is March 29th.

– Reuters