GKN rejects £7.4 billion hostile takeover bid from Melrose

Melrose, which specialises in buying up and rejuvenating manufacturers, said it believed it could "deliver significantly greater benefits" to GKN's shareholders than GKN could on its own.

Last week, GKN rebuffed an initial £7bn bid from Melrose because it "fundamentally undervalued" it.

It said the terms of the latest offer were "effectively unchanged".

Melrose is offering 430.1p in cash and shares for GKN, compared with its initial bid of 405p per share.

Under the terms of the offer, GKN shareholders would own 57 per cent of the enlarged group and, according to Melrose, would become "major participants in the potential future value creation in both the GKN and Melrose businesses".

But in its statement today, GKN's board said Melrose's proposal would "materially dilute the exposure of GKN shareholders to the meaningful upside opportunities that the board believes are present within the group".

GKN's new management, under chief executive Anne Stevens, was "currently undertaking a series of shareholder meetings to explain why GKN's current owners should retain 100 per cent of the benefits of the upside potential in GKN, rather than handing 43% to Melrose's management and shareholders", it added.

Melrose said it expected to "re-energise and repurpose GKN's operations".

Shares in car and plane part maker GKN rose by 1.3 per cent this morning, although they have subsequently lost most of that ground.

Melrose's shares are down by more than one per cent.

Today Melrose chief executive Simon Peckham said: "Since our approach was announced, the Melrose share price has risen as the market digests the attractive opportunity our proposal represents.

"However, the real value uplift will come from merging the interests of the two sets of shareholders and creating a business valued at approximately £11 billion today, of which GKN holders will own the majority, including Nortek, our US business which is trading strongly.

"We are having discussions with shareholders about the potential for the merged business, which will be one of the largest companies in the UK."

GKN has a major operation in Telford and employs about 340 people at Hadley Park making structural parts including wheels.