GKN has lambasted turnaround specialist Melrose for making "misleading statements" as it stepped up a hostile bid yesterday, which the engineering giant rejected.
The firm said Melrose's increased offer gave a "fake premium".
Melrose upped its original unsolicited bid of £7bn to £7.4bn based on a rise in its own share price, which closed at 234.3p yesterday. Melrose said its new offer represented a premium of about 32 per cent.
"GKN’s board considers 32 per cent to be a fake premium. Melrose’s market capitalisation on 5 January was significantly smaller than GKN’s on the same day, Melrose is proposing to fund 80 per cent of the offer consideration in shares and Melrose brings no industrial synergies. Instead, GKN’s shareholders are themselves funding the majority of this premium."
GKN said the "true, delivered premium" was less than 11 per cent.
Among its other complaints, the FTSE 100 firm also contradicted Melrose's implication that GKN wants a "hasty break-up" of its aerospace and automotive businesses and cast doubt on whether Melrose could achieve its goals of improving operations and generating shareholder returns due to the vast scale of GKN, which it said was five times the size of any of Melrose's prior buyouts by revenue.
“We believe GKN’s current owners should retain 100 per cent of the benefits of the clear upside potential in GKN, rather than handing 43 per cent of this upside to Melrose and its shareholders," said Anne Stevens, GKN's chief executive.
"We have already stated that the terms of Melrose’s offer fundamentally undervalue the company and we are actively engaging with shareholders to explain how our transformation plan will provide value, whilst debunking some of Melrose’s inaccurate assertions.”
US buyout giant Carlyle is still understood to be mulling an offer for GKN, but it has not yet engaged advisers.
Read more: GKN rejects Melrose's hostile £7.4bn bid