Statement re offer timetable and CFIUS

GKN PLC - Statement re offer timetable and CFIUS

PR Newswire

London, February 9

LEI: 213800QNZ22GS95OSW84

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.

9 February 2018

GKN plc (“GKN”)

Statement regarding offer timetable and CFIUS

Summary:

GKN is making the following announcement to ensure that its shareholders understand the implications of a technical timetable consideration

GKN continues to believe that the offer made by Melrose Industries PLC (“Melrose”) is derisory and that GKN has a far better strategy and detailed operating plan, informed by real industry expertise, to deliver shareholder value

GKN believes that the CFIUS process is likely to take substantially longer than the City Code offer timetable, based on specialist US legal advice

GKN firmly believes that shareholders should be allowed to make a fully informed decision and not be placed in a position where they have to form a final view on the offer while there remains uncertainty about the timetable and the outcome of a matter as material as the CFIUS process

In order to avoid this possibility, the Board of GKN is prepared to consider granting an extension to the City Code timetable to enable the CFIUS process to have concluded before shareholders are required to form a final view on the Melrose offer

Details of announcement

The Board of GKN has been in discussions with the Panel on Takeovers and Mergers (the “Panel”) in relation to the potential implications for the offer timetable of the “Defence and Ministerial Conditions” (which include CFIUS approval) contained in Melrose’s offer document. The Board wishes to make clear its position in light of the withdrawal of certain guidance previously provided to Melrose by the Panel.

Melrose posted its offer document (the “Offer Document”) to the shareholders of GKN on 1 February 2018, the first allowable date under the City Code timetable.

The Offer Document contains details of the “Defence and Ministerial Conditions” which include the approval of the Offer or confirmation of non-applicability by the Committee on Foreign Investment in the United States (“CFIUS Approval”).

In the Offer Document (paragraph 9 of Part 1), Melrose made the following statements:

“At the time of the Announcement the Panel Executive informed Melrose that if Day 60 was not extended under Rule 31.6 of the City Code and if the Defence and Ministerial Conditions are not satisfied within 21 days of Day 60 it would be minded to give its permission to the extension of the 21 day period in Rule 31.7 of the City Code to provide further time for any outstanding Defence and Ministerial Condition to be satisfied. This was predicated on Melrose taking the full 28 days allowed under the rules of the City Code to post this Offer Document. As this Offer Document has been published on an expedited basis, the Panel Executive has withdrawn the guidance communicated to Melrose at the time of the Announcement. Since the Announcement, Melrose’s contact with the relevant agencies has been positive and consequently Melrose continues to believe that it will be able to obtain the relevant clearances within the parameters permitted by the City Code timetable and remains committed to completing the Acquisition as soon as possible.”

“In the event that Day 60 is extended by the Panel under Rule 31.6 of the City Code, which could require the consent of GKN, then Eligible GKN Shareholders who have previously accepted the Offer will be able to withdraw their acceptances from [the] date that is 21 days after the First Closing Date (i.e. from 30 March 2018).”

“The Panel Executive has informed Melrose that any request for an extension under Rule 31.7 of the City Code would need to be considered in light of the circumstances prevailing at the time.”

Accordingly, there can be no certainty that Melrose would, if it became relevant, obtain any extension to the 21 day period referred to in Rule 31.7 of the City Code nor as to the duration of any such extension. In addition, Rule 31.7 of the City Code states that the Panel Executive’s consent to an extension to the 21 day timetable after Day 60 will normally only be granted if, inter alia, it has not been possible to obtain an extension under Rule 31.6.

Having taken advice from a leading CFIUS law firm, GKN does not agree with Melrose’s assertion that it will be able to obtain CFIUS Approval within the parameters permitted by the City Code timetable. Instead, GKN believes that the likely time period for Melrose to obtain CFIUS Approval, including CFIUS pre-notification and statutory timelines once the CFIUS notice has been formally accepted by CFIUS, will be substantially longer than the City Code offer timetable. The advice provided to GKN reflects (i) the significance to US national security of certain of the defence programmes in which GKN participates, (ii) the hostile nature of the Offer and (iii) recent experience.

If Melrose does not obtain CFIUS Approval within the City Code timetable and no extension under Rule 31.7 is given, either the Offer will lapse or Melrose will be required to waive the CFIUS Approval. In the latter case, should GKN shareholders have accepted a substantially all share offer, there would be no certainty as to the outcome of the CFIUS Approval process, or as to the financial implications of any conditions that CFIUS might impose to obtain that approval.

Given the importance of GKN’s defence businesses, the Board is firmly of the view that it would not be in shareholders’ interests for there to be uncertainty about the CFIUS Approval, its timing or any conditions which might be attached to it as the offer timetable draws to a close. The Board of GKN has therefore informed the Panel that it would be willing to consider granting an extension or extensions to the City Code offer timetable, if requested by Melrose and as is permitted under Rule 31.6 (a) (ii) of the City Code. The specific duration of this extension or extensions would need to be agreed between GKN, Melrose and the Panel Executive in due course.

The Board of GKN considers Melrose’s offer to be entirely opportunistic and that the terms fundamentally undervalue GKN and its prospects. The Board intends to demonstrate over the coming weeks why its vision for the future of GKN, which is informed by real industry expertise, offers greater value and certainty than Melrose’s offer. The Board unanimously recommends that GKN shareholders reject Melrose’s offer and take no action. 

Contacts:

GKN plcGuy Stainer, Investor Relations DirectorTel: +44 (0)20 7463 2382

FTI ConsultingAndrew Lorenz / Richard MountainTel: +44 (0)203 727 1340

Gleacher Shacklock (Financial Adviser to GKN plc)Tim Shacklock, Dominic Lee, Tom QuinnTel: +44 (0)20 7484 1150

J.P. Morgan Cazenove (Financial Adviser and Corporate Broker to GKN plc)Robert Constant, Dwayne Lysaght, Stephen SmithTel: +44 (0)20 7742 4000

UBS (Financial Adviser and Corporate Broker to GKN plc)Hew Glyn Davies, James Robertson, Jonathan RetterTel: +44 (0)20 7567 8000

Further information

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this announcement or otherwise.

The distribution of this announcement in jurisdictions outside the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdiction.

Gleacher Shacklock LLP ("Gleacher Shacklock"), which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively as financial adviser to GKN and no one else in connection with the matters set out in this announcement and will not be responsible to anyone other than GKN for providing the protections afforded to clients of Gleacher Shacklock or for providing advice in connection with the subject matter of this announcement or any other matter referred to herein.

J.P. Morgan Securities plc (which conducts its UK investment banking business as J.P. Morgan Cazenove) ("J.P. Morgan Cazenove") is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom. J.P. Morgan Cazenove is acting exclusively as financial adviser to GKN and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters set out in this announcement and will not be responsible to anyone other than GKN for providing the protections afforded to clients of J.P. Morgan Cazenove or its affiliates, nor for providing advice in relation to any matter referred to herein.

UBS Limited ("UBS") is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom. UBS is acting exclusively as financial adviser to GKN and no one else for the purpose of the consideration of a proposed acquisition by Melrose and will not be responsible to anyone other than GKN for providing the protections offered to clients of UBS nor for providing advice in relation to the subject matter of this announcement or any transaction, arrangement or other matter referred to herein.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person’s interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person’s interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel’s website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel’s Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Publication on a website

In accordance with Rule 26.1 of the Code, a copy of this announcement will be published on the GKN website (www.gkn.com) by no later than 12 noon on the business day following this announcement. The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.