Airbus warns on Melrose takeover bid for GKN

Airbus has flown to the aid of engineering group GKN’s board, saying it could not give new business to the company if a hostile takeover bid succeeds.

GKN is opposing an £8.1bn attempt by turnaround specialist Melrose to woo its investors, arguing it undervalues the company.

The proposed “final offer” from Melrose is also facing opposition from MPs amid fears for what a takeover would mean for staff and investment at GKN.

Melrose has pledged to maintain spending at least at current levels and denied any suggestion of a short term approach.

The opinion of Airbus carries weight as it is currently GKN’s biggest customer – making parts for wings primarily and accounting for 20% of its aerospace sales last year.

Airbus chief operating officer, Tom Williams, said: “The industry does not lend itself to shorter term financial investment which naturally reduces R&D (research and development) 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.”

GKN chairman, Mike Turner, responded: “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.”

GKN has moved to lure investors away from interest in the Melrose offer by concluding a deal of its own to merge its automotive business Driveline with US firm Dana.

In a statement to the Reuters news agency Melrose’s chairman, Christopher Miller, said its approach was to “invest as if we were to own the business forever”.

“Under Melrose, shareholders and customers will be able to enjoy a considered and longer term process of value creation, investment and business enhancement.”

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