Melrose bids to woo GKN takeover opponents with pension concession

Melrose (LSE: 136541.L - news) , the takeover specialist behind a hostile takeover for engineering group GKN (Frankfurt: 694194 - news) , has offered a pension investment of up to £1bn to help seal the deal.

It announced the concession despite saying a week ago that it had made its "final offer" to shareholders after the company rejected its advances on value grounds.

Melrose, which has a history of restructuring companies before selling them on, has been facing calls from MPs (BSE: MPSLTD.BO - news) , unions and even GKN customers to clarify its intentions since its interest first surfaced.

Their concerns include jobs and investment - along with pensions.

Melrose said its offer to the pension scheme represented almost twice the amount of GKN's plans to reduce the current deficit, though the Unite union said it was demanding more information.

Melrose chairman, Christopher Miller, said: "The proposal we have made to the trustees of up to £1bn of contributions under our ownership is 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's measured approach represents certainty of strategy, value and management.

"We strongly urge GKN shareholders to accept our offer without delay."

Investors will vote on the Melrose bid next week.

GKN has moved to fend off the bid by concluding a deal of its own to merge its automotive business Driveline with US firm Dana - allowing GKN to focus on its aerospace work.

Dana also announced a concession of its own on Monday by confirming that in addition to the combined entity's New York listing, it would also seek to trade shares in London.

The move is aimed at getting around rules that prevent some UK funds from holding US stock.

GKN chief executive, Anne Stevens, said: "The listing on the London Stock Exchange (Other OTC: LDNXF - news) will make it possible for more of our shareholders to participate in the expected value creation opportunity from the combined Dana and GKN Driveline business."

Melrose argues GKN's Driveline deal would "destroy" potential value within the current business.

Unite's assistant general secretary, Steve Turner, said the union was meeting Melrose later on Monday to discuss its proposals.

He added: "Melrose's bosses have been far from clear about the detail of their true intentions for GKN beyond vague platitudes and soundbites.

"Question marks remain around the levels of debt Melrose will pile on the company and what it means for jobs, long-term investment and product development."