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You can find the current article at its original source at https://www.theguardian.com/business/2018/mar/23/gkn-major-shareholder-elliott-advisors-backs-melroses-hostile-bid
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| Version 1 | Version 2 |
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| GKN major shareholder Elliott Advisors backs Melrose's takeover bid | GKN major shareholder Elliott Advisors backs Melrose's takeover bid |
| (6 days later) | |
| GKN shareholder Elliott Advisors has said it backs a £7.8bn bid by Melrose for the British engineering firm, as the clock ticks down to next week’s deadline for investors to decide on the hostile takeover bid. | GKN shareholder Elliott Advisors has said it backs a £7.8bn bid by Melrose for the British engineering firm, as the clock ticks down to next week’s deadline for investors to decide on the hostile takeover bid. |
| Elliott, which has a 3.8% shareholding, told GKN’s management it did not trust it to deliver the “profound cultural shift” needed to meet new targets while driving through two deals. The move means that just under 10% of GKN’s shareholder base has come out in favour of the hostile bid, neck-and-neck with the 9% backing GKN’s board. | Elliott, which has a 3.8% shareholding, told GKN’s management it did not trust it to deliver the “profound cultural shift” needed to meet new targets while driving through two deals. The move means that just under 10% of GKN’s shareholder base has come out in favour of the hostile bid, neck-and-neck with the 9% backing GKN’s board. |
| GKN is a global engineering business based in Redditch, Worcestershire. It employs nearly 60,000 people across 30 countries. | GKN is a global engineering business based in Redditch, Worcestershire. It employs nearly 60,000 people across 30 countries. |
| Once known as Guest, Keen and Nettlefolds, the firm can trace its origins back to 1759 and the birth of the Industrial Revolution in Britain. | Once known as Guest, Keen and Nettlefolds, the firm can trace its origins back to 1759 and the birth of the Industrial Revolution in Britain. |
| Split into three key divisions - GKN Aerospace, GKN Driveline and GKN Powder Metallurgy – the multinational designs, manufactures and services systems and components for most of the world’s leading aircraft, vehicle and machinery makers. | Split into three key divisions - GKN Aerospace, GKN Driveline and GKN Powder Metallurgy – the multinational designs, manufactures and services systems and components for most of the world’s leading aircraft, vehicle and machinery makers. |
| In 2017 it recorded pre-tax profits of £572m. | In 2017 it recorded pre-tax profits of £572m. |
| Shareholders have until midday on Thursday to support the offer from turnaround specialist Melrose or the GKN management plan to spin off the engineering groups automotive business and combine it with the US-based Dana, leaving GKN focused on aerospace. | |
| Investors are divided. Columbia Threadneedle, which has a 3.4% holding, threw its weight behind GKN’s plan this week, joining top-30 investor Jupiter Asset Management. | |
| Elliott, which has joined Aviva Investors in backing Melrose, said in a letter to GKN’s executives that hostile takeover bids often pressed management teams to come up with ideas that in normal circumstances would be disregarded as “pure fantasy”. | Elliott, which has joined Aviva Investors in backing Melrose, said in a letter to GKN’s executives that hostile takeover bids often pressed management teams to come up with ideas that in normal circumstances would be disregarded as “pure fantasy”. |
| It added: “GKN’s track-record at improving its operating margins has been unimpressive, yet your team nevertheless claims that it can deliver on its most ambitious plan ever, and that a few potentially qualified individuals can extract the company from its torpor to deliver over a 35 percent increase in profitability.” Elliott also encouraged other shareholders to back Melrose. | It added: “GKN’s track-record at improving its operating margins has been unimpressive, yet your team nevertheless claims that it can deliver on its most ambitious plan ever, and that a few potentially qualified individuals can extract the company from its torpor to deliver over a 35 percent increase in profitability.” Elliott also encouraged other shareholders to back Melrose. |
| GKN began as the Dowlais Ironworks Co in south Wales in 1759. By the mid-19th century it had become the largest ironworks in the world, producing almost 90,000 tonnes of iron a year. | |
| A reverse takeover pushed through by entrepreneur Arthur Keen created Guest, Keen & Co. Two years later, Keen drove through the takeover of a reluctant Nettlefolds Ltd and the enlarged company became Guest, Keen & Nettlefolds. It was the largest iron, steel and coal group in the country. | |
| During the first half of the 20th century GKN became heavily involved in wartime production, while also making its first move into the emerging motor industry. It produced Spitfires, a specialised tank for the D-day landings and millions of steel helmets. | |
| GKN emerged from the second world war as Britain’s biggest steel producer but was virtually bankrupt. | |
| Faced with the Labour government’s drive to nationalise the steel industry, GKN gradually withdrew from steel over the next 20 years. It pushed into the automotive industry. | |
| The group made the first loss in its history; it soon expanded globally. In 1988 it acquired a stake in Westland, the British helicopter and aerospace manufacturer, and moved into aerospace technology. | |
| GKN focused on four businesses: aerospace, Driveline, powder metallurgy and land systems. It was relegated from the FTSE 100 index. | |
| GKN issued a series of profit warnings after writedowns at its North American aerospace division and its chief executive designate Kevin Cummings was ousted. | |
| Melrose made a hostile £7bn cash-and-shares takeover bid, upped to £8bn in March. Non-executive director Anne Stevens, a former Ford executive, became GKN’s new CEO. | |
| GKN struck a $6.1bn (£4.4bn) deal on 9 March to merge its automotive business with the US firm Dana in an attempt to fend off the Melrose bid. | |
| Shareholders have to decide whether to accept or reject the bid by 1pm on 29 March. Melrose needs 50% plus one share support. | |
| On Friday, Melrose lifted a self-imposed deadline for approval by the US authorities to enable the acquisition to conclude should shareholders back it next week. | On Friday, Melrose lifted a self-imposed deadline for approval by the US authorities to enable the acquisition to conclude should shareholders back it next week. |
| Melrose said discussions with the Committee on Foreign Investment in the United States and the Defense Security Service had been constructive and included potential interim mitigation measures. | Melrose said discussions with the Committee on Foreign Investment in the United States and the Defense Security Service had been constructive and included potential interim mitigation measures. |
| A mainstay of Britain’s engineering sector, GKN makes parts for the US aviation industry, such as the Boeing 737 jet and the Black Hawk helicopter, as well as components for Volkswagen and Ford cars. | A mainstay of Britain’s engineering sector, GKN makes parts for the US aviation industry, such as the Boeing 737 jet and the Black Hawk helicopter, as well as components for Volkswagen and Ford cars. |
| GKN’s status as a key UK manufacturing business, it employs 60,000 people across 30 countries, has led to trade unions, clients and MPs voicing concerns about the Melrose bid. Melrose rejects critics’ attempts to characterise it as an asset-stripper and instead claims it has a strong record of turning round ailing businesses. | GKN’s status as a key UK manufacturing business, it employs 60,000 people across 30 countries, has led to trade unions, clients and MPs voicing concerns about the Melrose bid. Melrose rejects critics’ attempts to characterise it as an asset-stripper and instead claims it has a strong record of turning round ailing businesses. |
| But the asset-stripper accusations have been enough to spur some MPs into action. In February the defence secretary, Gavin Williamson, wrote to the business secretary, Greg Clark, who has the power to call a public interest inquiry into the deal, expressing his concern over Melrose’s bid. | But the asset-stripper accusations have been enough to spur some MPs into action. In February the defence secretary, Gavin Williamson, wrote to the business secretary, Greg Clark, who has the power to call a public interest inquiry into the deal, expressing his concern over Melrose’s bid. |
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