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You can find the current article at its original source at https://www.theguardian.com/business/2018/mar/26/gkn-tells-shareholders-to-choose-us-group-dana-over-melrose
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| GKN retracts claims of shareholder support against Melrose bid | |
| (about 1 hour later) | |
| UK engineering company GKN has been forced to retract statements suggesting it has backing from shareholders to fend off a hostile £7.9bn takeover bid from turnaround specialist Melrose. | |
| At the weekend GKN executives, gave bullish interviews in which they expressed confidence that investors would back the industrial group, including pointed references to long-term shareholders supporting its strategy. Short-term investors, including hedge funds, control about 25% of GKN. | |
| GKN rowed back on those interviews on Monday. In a statement to the London Stock Exchange, it said: “These statements of shareholder support in respect of GKN were not verified and are hereby retracted.” | |
| The Sunday Telegraph had quoted Anne Stevens, GKN’s chief executive, as saying she was “convinced investors will back [GKN].” | |
| The Sunday Times quoted Jos Sclater, the finance director, as saying that “long-only shareholders are mostly supportive of existing management, and understand that the Dana deal and becoming a pure play aerospace company has, longer term, significantly more value than the Melrose bid.” | |
| Separately on Monday, GKN sought to persuade shareholders to back an alternative deal with Dana by saying it would receive more cash from the US company and would return £700m to shareholders as soon as possible. | |
| GKN shares rose 0.5% to 431.2p in early trading, with the Melrose bid valuing GKN at 457.6p. | |
| Investors have to decide by Thursday noon whether to support the offer from Melrose or the GKN management plan to spin off its automotive business and merge it with the US-based Dana, leaving GKN focused on aerospace. | Investors have to decide by Thursday noon whether to support the offer from Melrose or the GKN management plan to spin off its automotive business and merge it with the US-based Dana, leaving GKN focused on aerospace. |
| Shareholders are divided, with those officially backing Melrose accounting for nearly 10% of the shareholder base, compared with 9% for those supporting the GKN board. Elliott Advisors and Aviva Investors support the Melrose takeover, while Columbia Threadneedle and Jupiter Asset Management are backing GKN’s plan. | |
| GKN said on Monday that Dana had increased the amount of cash payable by $140m (£100m). GKN will now receive $1.77bn in cash after deducting $1bn for the transfer of the pension deficit to the Dana-GKN Driveline group. GKN shareholders will continue to own 47.25% of the combined company, which would be listed on the New York and London stock exchanges. | |
| GKN plans to return up to £700m of cash to shareholders “as soon as practicable” following the deal with Dana – the first instalment of the up to £2.5bn cash return programme was announced previously. | GKN plans to return up to £700m of cash to shareholders “as soon as practicable” following the deal with Dana – the first instalment of the up to £2.5bn cash return programme was announced previously. |
| Mike Turner, GKN’s chairman, reiterated to investors that GKN’s true value is more than £5 a share and that Melrose’s final offer “fundamentally undervalues your company and should be rejected”. | Mike Turner, GKN’s chairman, reiterated to investors that GKN’s true value is more than £5 a share and that Melrose’s final offer “fundamentally undervalues your company and should be rejected”. |
| “GKN has re-invented itself numerous times in its 250-year history,” he said. “We are confident that, following the Dana transaction and the non-core disposals, GKN will become a pure play aerospace company with a strong balance sheet, our pension challenges behind us and a clear plan for delivering leading margin performance.” | “GKN has re-invented itself numerous times in its 250-year history,” he said. “We are confident that, following the Dana transaction and the non-core disposals, GKN will become a pure play aerospace company with a strong balance sheet, our pension challenges behind us and a clear plan for delivering leading margin performance.” |
| Analysts at Numis said the Dana transaction was the right deal but at the wrong price and the wrong time. “The combination of Dana and GKN Driveline to create a world leader in auto driveline has significant strategic merits. The issue we have is that the business is being sold too cheaply and too early.” | Analysts at Numis said the Dana transaction was the right deal but at the wrong price and the wrong time. “The combination of Dana and GKN Driveline to create a world leader in auto driveline has significant strategic merits. The issue we have is that the business is being sold too cheaply and too early.” |
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