Melrose has announced it has offered an additional £1 billion boost to pensions as part of its takeover bid for engineering giant GKN.
This comes after GKN rejected what Melrose said last week was its ‘final offer’ of £8.1 billion.
GKN previously rejected a £7.4 billion bid made back in January, which it dismissed as “opportunistic”.
The engineering giant has been the subject of a series of hostile takeover bids by Melrose following a number of profit warnings late last year.
Politicians had been weary of the potential takeover, given Melrose’s tendency to break-up and sell companies that it acquires.
Moreover, MP’s voiced concern for national security, given GKN’s role in providing defence capabilities to the U.K.
The additional pension provision may address concerns raised by the UK pensions regulator and MP’s who called for the deal to be blocked.
Melrose chairman Christopher Miller commented:
“The proposal we have made to the trustees of up to £1 billion of contributions under our ownership is a clear example of what Melrose does which is good for pensioners and shareholders alike and shows we are a good custodian for all stakeholders.
Melrose’s measured approach represents certainty of strategy, value and management. We strongly urge GKN shareholders to accept our offer without delay.”
Nevertheless, GKN remain firm in their opposition to the bid.
In a statement, Chief Executive Anne Stevens pointed towards the firm’s agreement to sell its driveline business to Dana, a US company.
“Since announcing the deal to bring GKN Driveline and Dana together, I have had the opportunity to speak to many of our shareholders and explain why I am so excited about this prospect.
“The complementary nature of the two businesses and our shared commitment to R&D and long term investment creates a fantastic opportunity to build a world leading company and create meaningful shareholder value by delivering $235 million in synergies.
“The listing on the London Stock Exchange will make it possible for more of our shareholders to participate in the expected value creation opportunity from the combined Dana and GKN Driveline business.”
The merged company will have a secondary listing on the London stock exchange alongside a a primary listing in New York, which may help to appease GKN investors.
