GKN share price outperforms market as Melrose unveils higher offer

Melrose specialises in buying industrial companies before improving them and selling them off

Melrose has said this will be the final offer as the acceptance deadline draws near.

Melrose - a FTSE 250-listed industrial turnaround firm - increased its bid to 1.69 Melrose shares for every GKN share held, plus an unchanged 81.00 pence in cash, together equivalent to 467.00p per share based on Melrose's share price at the close on Friday.

As part of its new, final offer, Melrose only increased the share element of its 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 billion bid in January, saying the new offer was final.

Shares in Melrose were 4.6% lower at 214.40 pence on Monday, while GKN shares were down 1.2% at 430.20 pence.

GKN said in response it was evaluating the new offer.

Melrose emphasised that the deal values GKN "significantly above" the highest price GKN has traded over the past decade.

"We believe the interests of shareholders in both companies are best served by accepting Melrose's raised bid", David Cumming, Aviva Investors' chief investment officer for equities, said.

"Following the (Dana) transaction, GKN shareholders will own 47 percent of a $14 billion revenue global automotive group and will retain ownership of GKN's outstanding remaining businesses", said GKN Chairman Mike Turner.

Over the weekend, GKN-which has two main divisions serving the aviation and automotive sectors-reached an agreement, subject to shareholder approval, to merge the latter with a United States counterpart, Dana in a $6 billion cash and shares deal.

Together with GKN's plan to sell its powder metallurgy business, the deal will leave the company focused on aerospace, supplying parts for aircraft including the Black Hawk military helicopter and Eurofighter Typhoon. Its aerospace division has also attracted a number of suitors since January, but the GKN board decided their proposals undervalued the business and did not pursue them, the company added.

Melrose responded by taking its offer directly to GKN investors, ramping up the pressure on GKN's newly appointed chief executive, Anne Stevens.

But on Monday Melrose said that it thought that tie-up was "hasty and ill-thought-through".

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