Melrose increases offer for GKN to £8.1bn

IAIN DEY AGENDAMarch 11 2018 12:01am The Sunday Times Iain Dey Whatever happens GKN will be broken up Iain Dey

IAIN DEY AGENDAMarch 11 2018 12:01am The Sunday Times Iain Dey Whatever happens GKN will be broken up Iain Dey

Melrose, a UK-based turnaround specialist, said on Monday that GKN investors would receive 81 pence in cash for every GKN share they hold, plus 1.69 new Melrose shares under its offer, upping the equity part of the deal from 1.49 new Melrose shares.

It has also raised the amount GKN shareholders would own in Melrose following the deal from 57% to 60%.

Melrose Industries has sweetened its hostile takeover offer for GKN, valuing the British engineering group at £8.1 billion. It has offered to give back £2.5bn to shareholders and agreed to merge its vehicle unit with United States company Dana.

"The board of GKN is now evaluating the revised offer".

GKN, one of Britain's oldest engineering businesses, has been fighting off Melrose's advances since mid-January, when it rejected a £7.4bn bid.

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Christopher Miller, chairman of Melrose, described the tie-up with Dana as a "bad deal" in a letter to GKN shareholders and accused the GKN board of attempting a "hasty fire sale".

Mr Miller said: "Your Board has unequivocally declined each time to enter into any such discussions with us and, as recently as Friday 9 March, was unwilling to even enquire on your behalf as to the terms of any revised proposal, a decision that no doubt you will find both surprising and disappointing".

Melrose's share price meanwhile has slipped into the red and is now 0.76 percent lower at 223.00p, as compared with a 0.32 percent gain in the mid-cap FTSE 250 index.

In a letter to GKN shareholders, Melrose's chairman Christopher Miller said: "On the one hand you can join us on a journey of value creation by investing in a United Kingdom listed manufacturing powerhouse worth over £10 bn today and receiving £1.4bn of cash".

The deadline to accept Melrose's increased offer is 1pm on Thursday March 29.

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