GKN’s fate to be decided as crunch vote looms

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The future of GKN will be decided today when the result of a shareholder vote on Melrose’s £8.1 billion bid for the engineering giant is announced, bringing to a close a bitter takeover battle.

GKN investors have until 1pm to cast their ballots on the controversial deal and the result will be announced shortly after.

It follows months of acrimony between the two companies, with the latest salvos fired on Thursday.

Melrose stressed its commitment to improving “not only GKN, but the UK economy” in comments that its takeover target said smacked of “desperation”.

More than 50% of shareholders must vote in favour of the deal for it to gain approval after Melrose lowered the minimum threshold for acceptance of its bid from 90%.

Several GKN shareholders have nailed their colours to the mast over the past week, with Colombia Threadneedle, Pelham Capital, Sanderson Asset Management, Jupiter Asset Management and Lancaster coming out against the deal.

They plan to reject Melrose’s takeover offer and back the GKN board and its overhaul plans.

Airbus, GKN’s largest customer, has warned it could not give any new business to GKN if the deal with the turnaround specialist went ahead.

Those who have come out in favour of Melrose include Aviva and Elliott, which owns 3.8% of GKN.

Brit Awards 2018 – Show – London
Business Secretary Greg Clark has called for ‘binding’ agreements over Melrose’s proposals for GKM (Victoria Jones/PA)

During the First World War, it was heavily involved in making steel for military purposes, such as shells.

After the outbreak of the Second World War, GKN produced Spitfires and specialised tanks for the D-Day landings, as well as millions of steel helmets.

Business Secretary Greg Clark has called for “binding” agreements over Melrose’s proposals for GKN, which sparked a raft of assurances, including plans to keep the firm listed and headquartered in the UK.

Melrose said it is ready to make a five-year commitment to the business, having agreed with the Takeover Panel to maintain its UK listing and headquarters and ensure that a majority of its directors are resident in the UK.

GKN has so far rejected Melrose’s advances, with chief executive Anne Stevens describing Melrose’s takeover as “high risk” and the offer not coming close to reflecting true value.

Instead, GKN has announced a raft of counter-measures, including a deal to sell its automotive division Driveline to US firm Dana.

Pressure has also been applied to the Government to intervene in the proposed takeover, with unions and MPs warning over asset-stripping and flagging national security concerns.

GKN became a target following profit warnings in October and November after problems at its US aerospace division sent shares tumbling.

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