GKN Live Discussion

Yertiz 22 Mar 2018

Some perspective on the battle The Times Business News Commentary (from ADVFN) __________ __________ ________ Takeover battle Not more corrections from Anne Stevens. Has someone got the GKN boss’s 70th birthday wrong again — an easy mistake, too, given it’s still listed at Companies House as March 1948? No, nothing to do as it happens with her official birthday or her real one in December. This time she’s “rebutting Melrose’s misleading statements” — ones the architects of the £8 billion bid didn’t even rebut back, given they stand by all of them. Anyway, Ms Stevens denies that selling almost 53 per cent of the Driveline business to Dana is “hasty and ill-thought through” on the grounds that GKN had considered a tie-up with the US company “for a number of years”. Presumably, all the time it was denying it had any plans to split up the car and aircraft components group. Neither does she have any truck with Melrose claims it has “adopted many of the ideas” it set out for the aerospace business. Whatever. Still, it must be news to Melrose that it has “absolutely no plan for the business”. It’s had “absolutely” the same plan since day one: buy, improve, sell — a contrast to Ms Stevens, who has had a new plan most weeks. On January 18 she was correcting Melrose’s implication that GKN wanted a “hasty break-up” of the business. “This is not the case”, GKN declared, with Ms Stevens insisting “GKN’s current owners should retain 100 per cent” of the upside of its turnaround. Weeks later she was flogging control of Driveline to Dana and putting the powder metallurgy arm on the block. Tot it up and Ms Stevens will be selling 73 per cent of “group management revenue” and 63 per cent of its trading profit. Or, as the Daily Mail is yet to put it — “Save GKN and keep control of 27 per cent of sales”.

Kingel 22 Mar 2018

ShareCast News GKN has written to its shareholders urging them not to back Melrose Industries' hostile takeover bid, describing the turnaround specialist as an unsuitable steward of the company.With a week until the 29 March deadline for shareholders to respond to Melrose's £8.1bn offer, GKN chairman Mike Turner told shareholders Melrose's offer was "wholly inadequate" compared with GKN's own strategy. His letter is the latest salvo in a bitter battle for the future of the FTSE 100 engineer.GKN published the letter as Melrose said it had reached an agreement with GKN's pension scheme that would protect and improve the position of the scheme's members.GKN proposes selling its automotive business to Dana Inc of the US, leaving a "world-class" aerospace company that will "positively re-rate" in line with peers, Turner said. GKN shareholders would have a stake in Dana, allowing them to benefit from combining the automotive businesses, GKN said.Turner referred to Airbus's warning about GKN being owned by a company with a short-term investment plan. Airbus, GKN's biggest customer, said on 21 March it would be almost impossible to award new work to GKN under Melrose's ownership."We believe that Airbus is right to be concerned about such an approach and the comments from Airbus reinforce our firmly held belief that Melrose is not an appropriate owner of GKN," Turner said. "Indeed, throughout this process, Melrose has shown itself to be an unsuitable steward of your company with no long term plan."GKN and Melrose have been locked in an increasingly rancorous battle since GKN's board rejected Melrose's approach in January. Melrose has said GKN's management is not up to the job of reviving the engineer's fortunes while GKN has branded Melrose a novice operator with no plan for the business.GKN's pension scheme has been one of the main points of contention between the companies. Melrose said it had agreed with the trustees to inject about £1bn into the scheme if its takeover goes ahead.Melrose's chairman, Christopher Miller, said: "The agreement with the GKN pension scheme Trustees is another concrete example of Melrose's exemplary track record with pension schemes and its desire to look after all stakeholders. This agreement would significantly improve the position of the members of GKN's pension schemes and is in line with our original plans for the business."

gamesinvestor 22 Mar 2018

Re: novices is right ""cant see what GKN's argument is apart from their vested interest inholding onto their cushy jobs.""They do have a point in this statement :-""Melrose also has a poor track record in cyclical industries. Operating profit at Brush, Melrose's highly cyclical business, has declined by over 75% between 2012 and 2017, and in February 2018 Melrose announced a £145 million write down of the carrying value of Brush.""I agree that lacklustre management should be shaken up, but a company like Melrose would do nothing for the long term future of GKN driveline or the aerospace business.The sole reason to buy it is to opportunistically offload it again down the line. That's all Melrose exists for, to turn a short term profit for shareholders and with outsize gains for the management few at Melrose.Nothing wrong with that, other than you won't have a business with a long term investment return.Games

give the dog a bone 21 Mar 2018

novices is right for novices , Melrose seem to be doing pretty darn well... cant see what GKN's argument is apart from their vested interest inholding onto their cushy jobs.

Kingel 21 Mar 2018

ShareCast News GKN branded Melrose Industries a novice operator with no plan, in the latest round of accusations between the companies locked in a hostile bid battle.The FTSE 100 engineering company published a series of rebuttals to what it described as misleading statements made by Melrose, which is trying to buy GKN against the will of GKN's board.GKN said Melrose was "a novice in automotive" with little experience in aerospace and no wider plan. It rejected claims made by Melrose about GKN's research and development spending and pension contributions and the proposed sale of GKN's automotive business.Melrose and GKN have engaged in a war of words since GKN rejected the turnaround company's £7bn approach on 12 January. Melrose lodged a final bid of £8.1bn on 12 March and shareholders have until 29 March to vote on the offer.GKN has agreed to sell its automotive division to Dana Inc of the US as an alternative to Melrose's claim that it will run the business better. Melrose has said the deal is hasty and not thought through but GKN said it had considered a combination with Dana for a number of years and that Dana approached it in late 2017.GKN also said:Melrose is a "novice operator" in automotive and has minimal experience in aerospace, an industry it has been out of since 2007.GKN had not adopted many of Melrose's ideas for its aerospace business and had already identified changes in 2017.GKN's research and development spending in 2017 was £262m compared with £230m by Melrose over five years.GKN has not reduced annual contributions to pension schemes. Contributions rose from £100m in 2015 to £121m in 2016 and £344m in 2017.Anne Stevens, GKN's chief executive, said: "In scale and nature, GKN is completely different from any business Melrose has ever bought. Melrose lacks the knowledge and experience to manage GKN successfully and has absolutely no plan for the business. Melrose is the high-risk choice. Melrose's offer does not come close to reflecting GKN's true value and I urge shareholders to reject it."

pike fisherman 21 Mar 2018

Re: Putting the record straight One or two unprovable “fabrications” here I think.

Lupo di mare 21 Mar 2018

Putting the record straight "As we approach the conclusion of this hostile takeover attempt, the Board of GKN wishes to ensure that shareholders have the correct and complete information, and are not influenced by misleading statements made by Melrose Industries PLC ("Melrose" as part of its highly opportunistic offer. We are therefore setting out the facts versus Melrose's claims. On the Dana deal… Melrose claims the Dana transaction is a "hasty and ill-thought-through transaction" · GKN has considered a combination with Dana Incorporated ("Dana" for a number of years. Most recently, Dana approached GKN to discuss a combination in late 2017 before Melrose had made its approach· The combination brings together two highly complementary businesses creating a global leader in light vehicle drivetrain systems and one of the largest powertrain suppliers worldwide. The combined group ("Dana plc" will be a leader across key mobility markets with a portfolio balanced across the passenger car, light truck, off-highway and commercial vehicle segments· GKN shareholders will receive 47.25% of a world leading vehicle drive systems business, with a standard listing on the London Stock Exchange, and in addition GKN will receive cash proceeds, net of £0.8 billion of pension deficit transfer, of £1.2 billion.Melrose claims the Dana transaction has been proposed "prior to any improvement made for the benefit of GKN shareholders" · The combination of GKN Driveline and Dana values GKN Driveline at a highly attractive 2017 EV / EBITDA multiple of 7.5x, with GKN shareholders owning 47.25% of the combined business and enjoying the benefits of expected future value creation· Following the Dana combination, GKN shareholders will not only continue to have access to the expected Boost benefits from Driveline, but will also share in the significant run-rate synergies of $235 million1 (£170 million) per annum resulting from the combination.Melrose claims the Dana combination "forces GKN shareholders, if they are so able, to accept shares in a foreign listed company... Many GKN Shareholders will have no alternative but to sell these shares" · Dana plc's standard listing on the London Stock Exchange will make it possible for more of GKN's shareholders to participate in the expected synergies and value creation opportunity from the combined business· Dana's decision to implement a standard listing followed extensive discussions with GKN's shareholders.Melrose claims the Dana combination would "involve a lengthy and uncertain completion process" · Based on extensive analysis, both GKN and Dana are confident that regulatory approvals will be forthcoming and that the transaction will complete by the end of 2018· The combination with Dana does not require CFIUS clearance.On Strategy for GKN Aerospace… Melrose claims GKN has "adopted many of the ideas" for its Aerospace business which Melrose set out in its initial approach · GKN Aerospace identified opportunities to unlock further value back in 2017 and is already well underway with fixing US sites and moving to a Global Operating Model. GKN Aerospace is now positioned to deliver value to shareholders for decades· Melrose has so far failed to disclose any plans for GKN's Aerospace business; it is difficult to understand how they can claim GKN copied anything.On Research and Development… Melrose claims GKN's "expensed R&D spend [is] approximately half of Melrose's" · Melrose claims to have invested more than £230 million in R&D in Nortek and Elster over the past five years· In 2017 alone, GKN expensed more than £262 million in R&D.On Management… Melrose claims it has "the best team to realise GKN's full potential" · Melrose is a novice in automotive. It has no experience as a tier one supplier and has nowhere near the experience of the combined Dana management team and the senior GKN Driveline team· Melrose is littl

RAConnell 20 Mar 2018

Re: Every little helps Lupo,I assumed (wrongly?) that you were considering buying (or adding) GKN to a current holding. If so, however patient you are, I find it difficult for GKN to exceed its current level. If the bid falls though then I'd expect GKN to fall below 400p. In any event good luck with whatever you decide.Cheers, RAC

Lupo di mare 20 Mar 2018

Re: Every little helps RAC - " I fail to see what justification there is to expect GKN to prosper in the future having not done so in the past."Really? Really? Oh well, whatever.

RAConnell 20 Mar 2018

Re: Every little helps Lupo,While 5 years is not necessarily long term the chart shows that the Melrose bid took GKN temporarily to its highest level in 5 years. I fail to see what justification there is to expect GKN to prosper in the future having not done so in the past.Cheers, RAC

Lupo di mare 20 Mar 2018

Re: Every little helps From my point of view, RAC, as I invest for the long term, and any fall back should last only until GKN show that they're delivering the goods, although your point of view will undoubtedly appeal to some.

RAConnell 20 Mar 2018

Re: Every little helps Lupo,If a failed bid takes GKN to 360p after it has just come back from 450p then maybe GKN shareholders should take what is currently on offer before it falls further. GKN's management are merely cobbling together a hasty strategy the prime aim of which is to save theor own jobs knowing full well that Melrose will sack them.Strong sell if bid fails which looks likely. Otherwise a strong buy if Melrose succeeds,Cheers, RAC

Kingel 20 Mar 2018

ShareCast News One of the most intense games of corporate ping-pong continued apace on Tuesday, as GKN responded to Melrose's latest allegations over its UK pension schemes.The FTSE 100 firm had come under fire from turnaround specialist Melrose on Monday - which is working to convince GKN shareholders to accept its hostile takeover bid, as the deadline for acceptance looms.GKN said on Tuesday that Melrose's comments were "misleading as to the true status" of its pension obligations, post the proposed combination of its Driveline business with Dana.It said that, as part of the transaction with Dana, GKN would transfer £1.375bn of gross pension and post-retirement medical scheme liabilities, and £818m of pre-tax deficit.In relation to the remaining pension liabilities, under its binding agreement with the UK pension trustees, GKN said it had agreed actions to eliminate the IAS 19 deficit of its UK schemes, remove the need for expected future cash contributions into the UK schemes, reduce the gross UK IAS 19 liabilities of its schemes to under £2 billion, and substantially reduce the volatility of the remaining UK schemes.The stand-alone Aerospace business was expected to retain an investment grade credit rating with conservative leverage ratios, GKN claimed.In comparison, having criticised the well-established and proven liability management exercises agreed between GKN and the trustees, the board said Melrose had not to date agreed any meaningful short-term actions to reduce the existing scheme liabilities."GKN has a clear and comprehensive plan to reduce its pension liabilities and eliminate the deficit in its UK pension schemes," said GKN group finance director Jos Sclater."We have a binding agreement with the trustees which works for all stakeholders - the scheme members, the trustees and the company and its shareholders."Sclater said that a month ago, Melrose appeared to suggest that its plan to pay £150m into the pension scheme was sufficient."Now it appears to have unveiled a £1bn plan that would achieve less than GKN's own agreement with the trustees, at a greater cash cost which would erode shareholder value."I think our shareholders deserve better."

Lupo di mare 20 Mar 2018

Every little helps LONDON (Alliance News) - One of GKN PLC's largest shareholders has publicly declared it will reject Melrose Industries PLC's hostile takeover offer for the company, the Times reported on Tuesday.Columbia Threadneedle, which owns a 3.4% stake in engineer GKN, has said it will vote in favour of the existing GKN management, the newspaper said.GKN has been fighting off the bid from Melrose since January, and GKN shareholders have until Thursday next week to declare who they are backing.Columbia Threadneedle is the third largest shareholder in the company, the Times said, and is the biggest so far to make known its position publicly."Would be so good if the hostile bid failed and they could get on with running the company. It should have a good future, but would have been better if MRO had never come along, IMO. Poor performance recently masked real investment for the future, and the US mess was a wake-up call.I'm not often reassured by a sp fall, but in this case I believe that it's reflecting the general view that the bid will fail. Where the sp ends up in the short term should GKN remain independent, I don't know, but I'm guessing around the 360 mark. Place your bets.

Kingel 20 Mar 2018

ADVFN Elsewhere, the GKN/Melrose saga continued as Dana Inc, which has agreed to merge with GKN's Driveline business, said the new combined business will hold a standard listing on the London Stock Exchange, in addition to being listed on the New York Stock Exchange. It also said the combined group would create a US and UK-led global leader in vehicle drive systems and electric propulsion, that was well-suited to address the long-term demands of global customers, expecting to deliver $235m (£170m) in synergies.Meanwhile, Melrose said that its final offer of 466p in value today and 60% of future value creation, was “clearly superior” to the “hasty break-up” being pursued by the GKN board. GKN was in the black while Melrose retreated.