TOP NEWS: GKN Backs Airbus Views On Hostile Melrose Industries Bid

15th Mar 2018 10:44

LONDON (Alliance News) - Automotive and aerospace components manufacturer GKN PLC on Thursday agreed with comments made by its biggest customer Airbus SE in regards to the hostile takeover bid for the company by Melrose Industries PLC.

"The comments from Airbus that stress the need for long-term investment and strategic vision in our industry emphasise our firmly held belief that Melrose is not an appropriate owner of GKN," GKN Chairman Mike Turner said, adding that the Airbus comments reinforce GKN's belief that winning new work would be more difficult if customers were uncertain over the identity of their future long-term partners.

"Its management lacks the relevant experience and its short-term business model is inappropriate for GKN's customers and investors," Turner said.

Melrose - a FTSE 250-listed industrial turnaround firm - on Monday raised its offer for GKN to GBP8.4 billion from the initial GBP7.1 billion announced in January. The increased bid followed the announcement last Friday that GKN had reached an agreement to combine its automotive Driveline business with New York-listed engineering firm Dana Inc in a USD6.1 billion cash-and-shares deal.

On Wednesday, Airbus' Chief Operating Officer for its commercial aircraft division Tom Williams told the Financial Times it would be "practically impossible" to give new work to GKN if the Melrose bid succeeds as the turnaround specialist would be too focused on the short term.

"It would be practically impossible for us to give any new work to GKN under such an ownership model when we don't know who will be the long-term investor," Williams told the FT.

According to the newspaper, Williams did not name Melrose specifically, but it is the only company bidding for GKN, and one person close to Williams said he had serious questions on Melrose's commitment to long-term research and development.

Melrose has rejected allegations it was a short-term investor. "Melrose manages and invests in its businesses and its customer relationships as if we were to own those businesses for ever," the company told FT.

"We arranged some time ago to talk to Airbus at a very senior level to make exactly these points and this conversation is scheduled to take place very shortly," Melrose said in a statement, according to the FT.

Airbus represented 20% of the sales of GKN's Aerospace division in 2017.

Shares in GKN were down 1.9% at 429.40 pence on Thursday, and Melrose shares were down 0.9% at 218.70p.

https://www.ft.com/content/291893d0-27a8-11e8-b27e-cc62a39d57a0?emailId=5aa99457768ad90004ebaa65&segmentId=3d08be62-315f-7330-5bbd-af33dc531acb

---

Related Shares:

MelroseAIR.LGKN PLC