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Melrose wins shareholder support for GKN takeover

GKN shareholders have voted to accept a takeover bid by turnaround specialist Melrose Industries.

Melrose says that 52.43% of GKN shareholders had voted in favour of its revised offer – which valued the UK aerostructure specialist at £8.1 billion ($11.4 billion) – when a deadline expired earlier today.

The UK investment firm had tabled, in January, an initial, speculative bid that valued GKN at around £7 billion.

Chairman Christopher Miller states that Melrose is “delighted and grateful to have received support from GKN shareholders for our plan to create a UK industrial powerhouse with a market capitalisation of over £10 billion and a tremendous future”.

He says Melrose “made commitments as to investment in R&D, skills and people” – adding: “Let me assure you that GKN is entering into very good hands.”

The intention is to create “substantial value for our shareholders, old and new”, he says.

GKN, for its part, reiterated its criticism that Melrose’s offer “fundamentally undervalues” the business.

The manufacturer warns that if the shareholder acceptance reaches 75% and Melrose delists GKN – as previously stated – shareholders could be left with “a minority interest in an unlisted company”, and “liquidity and marketability of GKN shares [could be] significantly reduced as a result”.

Melrose’s offer will remain open for at least two weeks.

UK aerospace trade association ADS called on Melrose to provide “binding commitments” to address “concerns” raised by GKN stakeholders – including the manufacturer’s largest customer, Airbus – in response to the takeover bid.

“This is a worrying time for GKN, its employees, pensioners, suppliers and customers,” states ADS chief executive Paul Everitt.

“Melrose should talk to these important stakeholders and reflect on issues and concerns that have been raised during recent weeks,” he says.

He urges Melrose to “formally respond” to issues and offer “legally binding commitments allowed within current legislation”.

Everitt proposes that the UK government should then assess whether Melrose’s commitments are “sufficient" or whether the bid should be referred to the country's Competition and Markets Authority.

“GKN is an important part of the UK industrial landscape and it is important that its owners continue to invest for the long-term and support high value jobs both directly and throughout its UK supply chain,” says Everitt.

Earlier this month, Airbus chief operating officer Tom Williams said in the Financial Times that the aerospace industry requires "a commitment to long-term investment and strategic vision", which he sees as incompatible with typical venture capital or restructuring models.

"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," he says.

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