Melrose Industries PLC on Thursday said it has completed the demerger of the GKN Automotive, GKN Powder Metallurgy and GKN Hydrogen businesses from the company into Dowlais Group PLC.
Shares in Melrose more than double to 390.30 pence each in London on Thursday around midday. They closed at 161.95p on Wednesday.
The demerger company consists of the Automotive, Powder Metallurgy and Hydrogen businesses of GKN. Melrose bought the UK engineering firm in 2018 in a hostile takeover. Back in September of last year, Melrose said it planned to retain the Aerospace part of the GKN business and spin-off the rest as a separate London listing.
In January, Melrose said the combined DemergerCo businesses recorded £5.20 billion in revenue in 2022, up 6% at constant currency rates. Operating profit was between £320 million and £330 million, up 21%. The operating margin was 6.3%, which Melrose said was up from 5.5% in 2021.
On Thursday, Melrose said that the demerger plans are now complete.
Prior to the demerger, on Wednesday, the company undertook a three for one consolidation of the existing Melrose ordinary shares. It said that in order to ensure that no outstanding fractional amount of a new Melrose share existed following the share consolidation, two existing Melrose ordinary shares were allotted and issued to Investec Bank PLC after close of trading on Wednesday.
As a result of the share consolidation, Melrose’s issued share capital consists of 1.35 billion shares. It does not hold any shares in its treasury. Dowlais’ share capital consists of 1.39 billion shares.
Further, the shares of Dowlais have been admitted to the premium listing segment of the Official List of the UK Financial Conduct Authority and to trading on the London Stock Exchange’s main market for listed securities. They will trade under the ticker ’DWL.L’.
Melrose Chief Executive Officer Simon Peckham said: ‘We are very happy to complete today the demerger of Dowlais. We thank shareholders for their support. We are confident that Dowlais will have a very successful independent future led by Liam and his team. It has been a pleasure to be involved in the improvement of the Dowlais businesses.
‘For Melrose, the focus is now on the continued development of the Aerospace business which over the next few years has the opportunity to clearly establish itself as a leading focussed aerospace business making £1 billion of Ebitda.’
Meanwhile, Dowlais CEO Liam Butterworth also issued a statement: ‘Dowlais brings together the market leading GKN Automotive and GKN Powder Metallurgy businesses and an exciting opportunity in GKN Hydrogen. We have a clear strategy to create value for our stakeholders by: delivering industry leading financial performance; facilitating the world’s transition to electric vehicles through a portfolio of cutting-edge products; and accelerating growth through a disciplined mergers & acquisitions strategy.’
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