Takeover specialist Melrose has won control of British engineering giant GKN after a bitter £8.1bn battle for the company.
Melrose clinched the cash and shares deal despite warnings from GKN’s management, who vigorously resisted the approach, by going directly to shareholders with a hostile bid.
Christopher Miller, Melrose’s chairman, said the business would be in “very good hands” but Labour MP Jack Dromey said it was a “bleak day for British industry”.
Critics of the deal fear that the new owners could take an axe to jobs.
The takeover is Britain’s biggest hostile bid since Kraft snapped up confectionery giant Cadbury in 2009.
Business Secretary Greg Clark secured assurances from Melrose about its plans during the bid process.
Following the investor vote, Mr Clark said the Government now had a statutory duty to consider whether the takeover gave rise to public interest concerns, and that this would be assessed by the “appropriate authorities”.
GKN employs 60,000 people worldwide including 6,000 in the UK and has roots dating back to the Industrial Revolution, making munitions during the First World War and Spitfires in the Second.
Today it manufactures components for aircraft makers including Airbus and Boeing and carmakers such as Volkswagen, Ford and Jaguar Land Rover – and its boss Anne Stevens had argued the bid approach was a high risk move that undervalued the business.
But Melrose said that GKN’s shareholders had been failed by management for years and that it could do better through a shake-up that would deliver stronger returns.
Its business model is typically to break up companies once it has improved their performance.
Airbus, GKN’s biggest customer, has warned that it would struggle to work with it under a short-termist ownership model.
Investors had until 1pm on Thursday to cast their ballots over GKN’s future. Hours later, Melrose said it had received acceptances of its offer totalling 52.4% of voting rights.
Christopher Miller, Melrose’s chairman, said it was “delighted and grateful” to have received backing for its plan to create a “UK industrial powerhouse” whose value it hopes to boost to more than £10bn.
He added: “We are looking forward to working with GKN’s talented workforce and to delivering for customers and all stakeholders.
“Melrose has made commitments as to investment in R&D, skills and people and we are very excited about putting these into action.
“Let me assure you that GKN is entering into very good hands.”
GKN said that it “now intends to work with Melrose to ensure the success of the enlarged company”. Shares closed 9.5% higher.
Business Secretary Greg Clark has received a number of commitments from Melrose, including promises to maintain a UK head office and stock market listing, as well as pledges on paying taxes in the UK and on spending on research and development and apprenticeships.
But Labour said the Government’s action had been “too little, too late”.
Shadow business secretary Rebecca Long-Bailey said: “They could have intervened to stop this takeover, and they did not.
“As such, they have allowed a takeover to happen which may harm both our national security and industrial strategy.”
Jack Dromey, MP for Birmingham Erdington, said: “Today is a bleak day for British industry.
“The takeover makes a mockery of any talk by Government of an industrial strategy.”
“Britain’s takeover rules are in desperate need of reform.”
Mr Dromey said that the deal could have been prevented if rules had been in put in place by the Coalition Government meaning that shareholders could not vote unless they had held the stock for at least six months.
“Yet again, as in the Kraft takeover of Cadbury’s, we have seen a jewel in the crown of British industry sold off because its shares were bought up by hedge funds,” he said.
The Business Secretary defended the takeover process.
He said: “As a competitive economy Britain has always had vigorous contests for the management of public companies.
“Competition for how a business should best be run drives efficiency and competitiveness, which is important for the economy and stakeholders.”
Paul Everitt, chief executive of ADS, the aerospace and defence trade body, said: “This is a worrying time for GKN, its employees, pensioners, suppliers and customers.
“GKN is an important part of the UK industrial landscape and it is important that its owners continue to invest for the long-term and support high value jobs both directly and throughout its UK supply chain.”
Based in Redditch, GKN has its biggest factory at Filton, near Bristol, with other locations including Cowes, Birmingham, and Luton.
From – SkyNews