British engineer GKN rejects final £8.1b Melrose bid

  • British engineer GKN rejects final £8.1b Melrose bid

British engineer GKN rejects final £8.1b Melrose bid

But Melrose declared its sweetened offer as "final", meaning it can not improve the terms further under British takeover rules.

The increased bid followed the announcement on Friday that GKN had reached an agreement to combine its automotive Driveline business with New York-listed engineering firm Dana in a USD6.1 billion cash-and-shares deal.

Melrose earlier on Monday boosted its offer to buy FTSE 100-listed GKN to GBP8.1 billion in cash and shares from the initial GBP7.4 million bid in January, saying the new offer was final.

Melrose's previous offer was worth about 420p, below GKN's share price of 435.1p on Friday.

The final offer of £4.67 a share is valued at £8.1 billion (US$11 billion), Birmingham-based Melrose said in an open letter to GKN shareholders yesterday.

Just Eat fell over 4 percent on a brokerage downgrade.

GKN said in response it was evaluating the new offer.

The sweetener is necessary after GKN management revealed plans last week for a £4.4bn merger of its automotive unit with U.S. peer Dana.

"The muted market reaction... is the strongest indication yet that Melrose might not get its way", said Rebecca O'Keeffe, head of investment at Interactive Investor.

The asset management arm of Aviva owns nearly 1.2 percent of GKN and 5.4 percent of Melrose. The move came after the blue-chip company agreed a deal last week to merge its automotive division with Dana.

GKN has also pledged to return 2.5 billion pounds to investors in the next three years following the Dana deal and an earlier pledge to sell its powder metallurgy business.

It said that all recent attempts to engage in constructive discussions have been refused by the GKN board and that a proposed tie-up between GKN and Dana is "in our view, a bad deal for other stakeholders".

"The board believes that Melrose's Revised Offer continues to fundamentally undervalue GKN and has no hesitation in unanimously rejecting it", GKN Chairman Mike Turner said.

"It was a little bit better than we thought", he told Reuters.