GKN - Offer rejected, Automotive and Aerospace to separate

GKN - Offer rejected, Automotive and Aerospace to separate

Under the UK's takeover rules, Melrose now has until 5pm on February 9 to "put up or shut up" - either announce a firm bid or step away for the next six months, absent any change in circumstances.

GKN explained that the board had unanimously rejected the proposal, having concluded that it "is entirely opportunistic and that the terms fundamentally undervalue the Company and its prospects".

United Kingdom aerostructures manufacturer GKN has rejected a takeover bid from turnaround specialist Melrose Industries and disclosed a plan to separate its aerospace and automotive activities as part of a two-year business-improvement plan.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said the separation of units has "been on the cards for years, with little obvious crossover between the two businesses".

Melrose told the Stock Exchange on Friday there would be significant operational and commercial benefits arising from its ownership of GKN's businesses, "reversing a history of existing GKN management not delivering on margin targets".

Also included in the statement issued today reveals plans to split the aerospace and automotive divisions into separate companies, and that Anne Stevens, now Interim Chief Executive, agreeing to become the Group's new Chief Executive with immediate effect. "The timing of the separation will be determined by the need to maximise the economic benefits and minimise the costs associated with separation".

The firm itself undertook a "wide-ranging review" of its business past year, as profit margins and cash generation were stuck "below expectations". It includes plans to optimise "procurement, process & productivity, and capital allocation" and will also include the disposal or closure of non-core operations.

It also named former Ford executive Anne Stevens as chief executive, a role she has held on an interim basis since January 1st.

The group said Stevens has been leading an ongoing and wide-ranging internal review of all GKN's businesses which has culminated in the development of a transformation plan to improve significantly performance.

Stevens declares herself "confident that we can deliver more for our shareholders while improving what we do for our customers and supporting our employees".

GKN added that it was trading in line with expectations.

However, the 2017 pre-tax profit does not take into account a working-capital write-off signalled in November.

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