Melrose gets shareholder, EC OK for hostile GKN bid as engineer lays out strategic plan

Turnaround specialist Melrose Industries said on Thursday that its shareholders and the European Commission have backed its £7.4bn hostile bid for engineer GKN.

At a general meeting earlier in the day, Melrose shareholders passed both resolutions in connection with the proposed acquisition. Meanwhile, the European Commission gave its anti-trust clearance for the deal.

The news came on the same day that GKN presented further details on how it plans to transform the Driveline business through Project Boost by delivering "significantly improved" margins and cash flows.

The company said in a statement that it expects to deliver £153m of recurring annual cash benefit from the end of 2020 through Project Boost.

"In line with the overall group strategy, savings are expected to be realised through four key levers - manufacturing excellence (representing £55m of the total recurring annual cash benefit), functional excellence (£30m), direct procurement cost savings (£35m) and indirect procurement cost savings (£33m)."

Chief executive Anne Stevens said: "Our Driveline business is perfectly positioned to take advantage of the changing automotive market. With our world leading technology we have successfully pre-empted the needs of our customers and we will continue to do so.

"We will continue to develop and deliver the technologies that will enable our customers to succeed while realising the full value of our business."

GKN has been engaged in a bitter battle with Melrose since it made its hostile approach to the company back in January, dismissing the bid as "derisory" and saying it fundamentally undervalues the group and its prospects.

Stevens has accused Melrose of trying to buy GKN "on the cheap" just at the point when the engineer is starting to reap the benefits of its long-term investments.

At 1445 GMT, Melrose shares were down 0.2% to 214.60p and GKN was up 0.1% at 420.50p.