Saturday 22 September 2018

Airbus sends warning over Melrose’s GKN takeover

The aircraft maker warned it could not give any new business to GKN if the deal with Melrose went ahead.

Airbus has warned over Melrose's GKN bid (Sylvian Ramadier/Airbus)
Airbus has warned over Melrose's GKN bid (Sylvian Ramadier/Airbus)

By Ravender Sembhy, Press Association City Editor

The bosses of GKN and its largest customer Airbus have cast further doubt on Melrose’s £8.1 billion takeover bid for the engineering giant.

Tom Williams, the aircraft maker’s chief operating officer, warned it could not give any new business to GKN if the deal with turnaround specialist Melrose went ahead.

He said: “The nature of our industry is one that requires a commitment to long-term investment and strategic vision.

It would be practically impossible for us to give any new work to GKN under such an ownership model Tom Williams, Airbus

“The industry does not lend itself to shorter-term financial investment which naturally reduces R&D budgets and limits vital innovation.

“It would be practically impossible for us to give any new work to GKN under such an ownership model when we don’t know who will be the long-term investor.”

The comments will be a blow to Melrose as Airbus is GKN’s largest customer, representing 20% of its aerospace sales last year.

GKN manufactures parts for Boeing 737 jets and Black Hawk helicopters.

Earlier this week GKN rejected a final £8.1 billion takeover offer from Melrose, saying it “continues to fundamentally undervalue” the engineering company.

GKN chairman Mike Turner said: “The comments from Airbus that stress the need for long-term investment and strategic vision in our industry emphasise our firmly held belief that Melrose is not an appropriate owner of GKN.

“Its management lacks the relevant experience and its short-term business model is inappropriate for GKN’s customers and investors.

“As we have previously stated, and as these comments from Airbus reinforce, winning new business in our markets would be more difficult if customers were uncertain as to the identity of their future long-term partners.”

GKN is attempting to press ahead with a restructure in the face of Melrose’s overtures, which include merging its automotive business with US firm Dana in a 6.1 billion US dollar (£4.4 billion) deal.

However, Melrose chairman Christopher Miller  hit back , insisting that the company “invests in its businesses for the long-term”.

He added: “We will be delighted to explain to all customers and stakeholders why Melrose’s ‘invest as if we were to own the business forever’ approach is the right way forward for GKN.

“We are certain that GKN’s new strategy of hasty short term business break up will not benefit the long term requirements of customers.”

Shares in GKN were trading over 2% down at 427.9p in midday trading.

Press Association

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