GKN tells shareholders Melrose offer represents 'low price and high risk'
Source - SMW
GKN advised shareholders not to accept Melrose's hostile takeover offer as it was 'not a good deal' and represents 'low price and high risk.'
'The Board unanimously recommends that you should take no action in relation to the offer and that you should not sign any document which Melrose or its advisers send to you,' GKN said in a letter to shareholders.
GKN said that the premium Melrose is offering is 'very low,' and added that Melrose's stated premium of 22% is 'misleading' as its market capitalisation is significantly smaller than GKN's, the offer is 80% in shares, representing an actual premium of 10%.
GKN also highlighted Melrose's lack of relevant experience and said its short term business model is 'inappropriate' as the latter's three-to-five-year exit strategy is not compatible with the long-term investment and technology horizons that are essential in GKN's markets.
GNK called on shareholders to trust in the company's new strategy which aims to deliver returns to shareholders of up to £2.5bn over the next three years.
'Your Board strongly believes that GKN's new leadership team and strategy can maximise shareholder value and that, as a GKN shareholder, you should receive 100% of the benefit of this strategy.'
At 9:23am: (LON:GKN) GKN PLC share price was +7.5p at 418.8p