Melrose Industries has raised the stakes in its takeover battle for UK engineering giant GKN by upping its offer to £8.1billion.
In a final attempt to try and win over GKN shareholders, Melrose has offered a total of £1.4billion in cash and the chance to own a 60 per cent stake in the turnaround specialist – increasing its previous bid of £7.4billion.
Melrose claimed its ‘final’ offer represents an ‘attractive immediate premium’ of 43 per cent on GKN’s closing price on January 5 at 467p per share.
Chairman Christopher Miller blasted GKN’s own efforts to fight off the hostile takeover bid, taking aim at its recent agreement to merge its automotive Driveline business with US firm Dana in a £4.4billion deal.
In a letter to shareholders, Miller said: ‘We are nearing the end of the customary offer timetable and it is now time for you to decide.
‘On the one hand you can join us on a journey of value creation by investing in a UK listed manufacturing powerhouse worth over £10 billion today and receiving £1.4 billion of cash.
‘On the other hand your board is attempting a hasty fire-sale of GKN businesses before they have been given a chance to reach their potential and with damaging consequences, we believe, for all stakeholders.’
GKN announced the terms of the Driveline deal last week which would see Dana shareholders own 52.75 per cent of the company and GKN the remainder, with the combined company set to be domiciled in the UK but traded on the New York Stock Exchange.
GKN is one of the UK’s top engineering firms with developments in aerospace and automotives
It became a target following profit warnings in October and November after problems at its US aerospace division sent shares tumbling.
Miller said some GKN investors would not be able to hold the foreign listed Dana shares, adding that the Driveline agreement was likely to involve a ‘lengthy and uncertain completion process’ with competition clearances needed in the US, EU and China.
GKN, led by boss Anne Stevens (pictured) has blasted the Melrose bid as ‘entirely opportunistic’
He went on to criticise GKN management for the way it has handled the business and for failing to hold talks with Melrose over the offer.
‘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.
‘Instead of £1.4 billion in cash and a majority investment in a stronger combined Melrose / GKN business, it appears the GKN board prefers a minority stake in a foreign business (Dana) with no GKN management involvement.
‘The GKN board is suggesting this is the best option for shareholders, employees, pensioners and other stakeholders.’
The deadline to accept Melrose’s increased offer is 1pm on Thursday March 29.
GKN has dismissed Melroses’ ongoing attempts to woo its shareholders into accepting a deal, and has said it views the offer as ‘entirely opportunistic’ and ‘believes that its terms fundamentally undervalue GKN and its prospects’.