GKN in talks with Onex amid attempt to escape Melrose bid - report
04 FEB 2018
GKN [LON:GKN] has met officials from the private equity firm Onex [TSE:ONEX] as the UK-based industrial parts supplier attempts to fend off Melrose Industries’ [LON:MRO] GBP 7.4bn (USD 10.5bn) hostile takeover bid, The Sunday Times reported. Canada-based Onex is thought to be interested in acquiring GKN’s aerospace subsidiary, the unsourced report said.
Onex is seeking acquisitions in the UK and last week withdrew from an auction for IWG [LON:IWG] after having a GBP 2.5bn bid rebuffed, the report said.
Wichita, Kansas-based aerostructures manufacturer Spirit AeroSystems [NYSE:SPR], formerly owned by Onex, is thought also to be eyeing GKN’s aerospace business, the report said.
Meanwhile, The Sunday Telegraph reported that GKN’s attempts to repel Melrose have been hampered by concerns over GKN’s ability to deliver on major contracts. GKN is said to have struggled to achieve improvements it promised some of its major clients, the report said. An insider in the UK aerospace sector quoted in the piece said the company’s management is regarded as not being strong enough, while Melrose’s track record on strong management is excellent. Some of GKN’s biggest clients have signalled they back Melrose, the report said.
However, the article went on to quote an unidentified top-five GKN shareholder who said Melrose’s current proposal is too low and there is room for an increased bid. If the turnaround specialist fails to improve its offer, the investor said they have confidence in GKN’s management going forward.
Melrose officials, including Simon Peckham, chief executive, have been targeting GKN’s biggest shareholders in a charm offensive aimed at pressuring the company’s executives to enter negotiations, The Mail on Sunday reported.
The original reports appeared in print: The Sunday Times, Business & Money section page 1; The Sunday Telegraph, Business & Money section, page 1; The Mail on Sunday, page 49