GKN and Melrose shareholder Aviva Investors backs the new £8.1bn bid as GKN rejects final offer

Rebecca Smith
GKN has been the subject of a hostile takeover approach
GKN has been the subject of a hostile takeover approach

A shareholder in both Melrose and GKN today said it backed the turnaround specialist's increased offer of £8.1bn for the engineering giant.

Aviva Investors said this afternoon said it was in favour of Melrose's GKN bid, as the tussle between the two firms took yet another turn.

However, GKN has rejected the revised and final offer, saying it continues to "fundamentally undervalue" the company.

Mike Turner, GKN chairman, said:

Melrose is not the right owner of GKN. Its management lacks relevant experience and its short term business model is inappropriate for GKN's customers and its investors. Winning new business in our markets would be more difficult if customers were uncertain as to the identity of their future long term partners

Melrose confirmed this morning it had increased its offer for FTSE 100 giant GKN to £8.1bn, saying it will be a final offer of 467p per share. That would mean GKN shareholders would own 60 per cent of Melrose - up from 57 per cent, and receive £1.4bn in cash.

Read more: Melrose has just upped its offer for GKN to £8.1bn

This afternoon, David Cumming, chief investment officer, equities at Aviva Investors - which has a 5.4 per cent Melrose stake and 1.2 per cent one in GKN - said:

As shareholders in both Melrose and GKN, we favour Melrose’s proposed measured execution of value rather than GKN’s reactive review of its business structure. Consequently, we believe the interests of shareholders in both companies are best served by accepting Melrose’s raised bid.

Melrose had said earlier that all recent attempts to engage in "constructive discussions" had been refused by the GKN board.

The company's chair Christopher Miller warned against a "hasty fire-sale of GKN businesses before they have been given a chance to reach their potential".

The fresh - and final - offer came after GKN had struck a deal with US firm Dana on Friday in an effort to see off the Melrose approach.

It had reached an agreement to merge part of its business with auto parts firm Dana for $6.1bn (£4.4bn).

Melrose however, thinks this transaction is "prejudicial to GKN's UK shareholders".

Read more: Melrose mulls sweetening its bid for GKN as the deadline nears

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