GKN may extend Melrose bid deadline to give shareholders more time to reflect

GKN reiterated its belief on Friday that Melrose Industries' £7bn offer for the engineer is "derisory" as it said it is prepared to give investors more time to consider the bid.

The offer requires US approval, which GKN said would take "substantially longer" than the City Code offer timetable, based on specialist US legal advice.

"GKN firmly believes that shareholders should be allowed to make a fully informed decision and not be placed in a position where they have to form a final view on the offer while there remains uncertainty about the timetable and the outcome of a matter as material as the Committee on Foreign Investment in the US," it said.

"In order to avoid this possibility, the board of GKN is prepared to consider granting an extension to the City Code timetable to enable the CFIUS process to have concluded before shareholders are required to form a final view on the Melrose offer."

The company, which has announced plans to split its aerospace and automotive divisions, also took the opportunity to insist that it has a far better strategy and detailed operating plan, "informed by real industry expertise", to deliver shareholder value.

GKN, which rejected a second, sweetened bid from Melrose in mid-January, also said it plans to demonstrate over the coming weeks why its vision for the future of the company offers greater value and certainty than Melrose’s offer.

Turnaround specialist Melrose suggested in January that it could do a better job of improving the engineer's operational and financial performance, given its track record, but GKN argued that it is a significantly larger business than any of those acquired by Melrose in the past.

The company said at the time: "GKN is more than five times larger than any of Melrose’s prior acquisitions by revenue. Melrose has very limited experience at board level of managing Tier 1 aerospace and automotive suppliers. In contrast, Anne Stevens, having been COO of Ford Americas and chairman, CEO and president of Carpenter Technology, has direct experience of Tier 1 supplier relationships and of transforming a business of the size, complexity and technological content of GKN. Importantly, she has experience in aerospace, automotive and powder metallurgy."

On Thursday, it emerged that MPs have asked the government to consider using its powers to block takeovers for national security reasons to stop Melrose's hostile bid for GKN, which makes technology used in the F-35 fighter jet.

Labour MP Rachel Reeves, who chairs the business, energy and industrial strategy select committee, wrote a letter to business secretary Greg Clark, in which she said: "The hostile takeover bid for GKN raises serious concerns about protections for our vital industries, not least for our industrial strategy, which requires high-skilled jobs in engineering, science and research.

"GKN is important for the automotive and defence sectors of our economy and the Secretary of State needs to provide assurances that Britain’s strengths in these sectors will not be undermined by a takeover or by asset-stripping."

At 1515 GMT, GKN shares were down 1.4% to 400p while Melrose was off 1.2% to 210p.