• Why the the GKN bid battle matters

Labour called Melrose a "short-termist asset-stripper" and condemned the deal for one of Britain's oldest engineering firms, which has had a hand in making everything from Minis to Spitfires. The turnaround specialist's comments follow an exchange of letters with Business Secretary Greg Clark, whose calls for "binding" agreements over its proposals for GKN sparked a raft of assurances from Melrose a day earlier, including plans to keep the firm listed and headquartered in the UK. “The board of GKN now intends to work with Melrose to ensure the success of the enlarged company, in the interests of all stakeholders, including employees, customers and shareholders,” GKN said in a statement that recommended all shareholders now accept the bid. U.K. engineering company GKN Plc lost a hard-fought battle for independence after shareholders opted for a 8.1-billion-pound ($11.2 billion) offer from Melrose Industries Plc in a takeover that attracted scrutiny from government, a key customer and unions. It has promised to keep its headquarters in the U.K., a majority of directors as residents in the country and not to sell the aerospace division for at least the next five years. According to Zacks, “GKN plc operates as an engineering business serving the automotive, industrial, off-highway, and aerospace markets. Melrose's letter responded to a number of Mr Clark's concerns, having also called for GKN to continue as a UK taxpayer, pay suppliers promptly, make arrangements for current and future pensioners, and investment in the training and development of the workforce. Image copyright Getty Images Image caption Airbus has said new business with GKN after a Melrose takeover would be "practically impossible"

Before Melrose won the bid Airbus, which is supplied by GKN, said it would be "practically impossible" to give new business to GKN if Melrose's offer was accepted because it damaged long-term investment prospects in the company, which could reduce R&D budgets and limit innovation. GKN CEO Anne Stevens’s plans for the company had included selling its automotive business to U.S. supplier Dana for a sweetened $6.1 billion cash-and-share bid as well as other disposals that Melrose had characterized as a “hasty fire-sale.”

"We are, of course, disappointed by today’s outcome,” Dana said in a statement. In its defense against Melrose, the more than 250-year-old GKN has developed a plan to improve its operations, return cash to shareholders and merge its autos business with Dana to create a standalone company listed in London and the U.S..

On Monday, Dana increased the cash portion of its bid for GKN’s Driveline auto business by $140 million.
British automotive and aerospace engineering firm GKN (founded in 1759) is sold to British-based investment company Melrose Industries for £8.1 billion.