A “full and frank” meeting between trade union officials and the company mounting an £8bn hostile takeover for GKN broke up in acrimony on Monday amid accusations that the would-be buyer would not give assurances on future investment.
Unite said it had no confidence in bidder Melrose following the meeting, the first time the two sides had got around the table since the controversial hostile bid for GKN was unveiled in January.
Tony Burke, Unite’s assistant general secretary, said Melrose had refused “to offer concrete guarantees on jobs and skills” and accused the company of having “no clear long-term strategy to drive growth and innovation”.
Unite has been critical of Melrose’s bid for GKN, arguing that the company’s track record of seeking to restructure companies that it acquires and sell them on after three to five years mean that it was not a suitable long-term owner.
However, the fate of the bid remains finely balanced, with City investors backing both sides. On Monday a top 10 investor in GKN, Columbia Threadneedle, said it was backing the engineering group against Melrose – although another investor Aviva has previously come out supporting Melrose.
GKN has been forced to propose merging its car parts business with US company Dana in an alternative $6.1bn (£4.4bn) deal, leaving the industrial giant focused on its aerospace division, which supplies components for Franco-German aerospace group Airbus.
Airbus warns over Melrose’s £8bn GKN takeover
Melrose said on Monday it would put extra funds into GKN’s pension scheme, saying it would start with £150m in cash plus a further £60m over five years, taking the total it would plough in to £450m. Further contributions on future disposals, Melrose said, would take the figure to more than £1bn.
Christopher Miller, chairman of Melrose, said the pensions proposal was “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 sources added that the company typically invests 4% of sales in research and development, higher than the 2.2% historically invested by GKN, and argued that asset stripping would make no sense if the goal was to sell on restructured businesses to other industrial buyers at a higher price.
Last week Airbus, GKN’s biggest customer, said it could not guarantee new work to an owner with a short-term perspective, a point also highlighted by Unite following the Melrose meeting. Steve Turner, a Unite assistant general secretary, added: “The short-term, profit-driven nature of Melrose’s bid is leading to rising anger and instability amongst GKN’s workforce, as well as concerns with major customers, such as Airbus.”
Meanwhile, Dana said on Monday it would seek a secondary listing in London, a move which should enable more UK shareholders to back the rival plan as some funds are subject to rules which prevent them from holding US stock.
Dana also tried to give GKN shareholders extra confidence in the future of the merged car parts unit. It also upgraded its margin and sales guidance, saying it had “over-achieved” on synergies from past acquisitions.
GKN shares closed down 2.7p at 424.2p. Melrose’s offer of 81p in cash for each GKN share plus 1.69 new Melrose shares was worth 457p a share at the close of business; a transaction that would hand GKN investors a 60% stake in the London-listed turnaround specialist.