GKN hits out at 'misleading' Melrose pension claims

GKN hit out at Melrose after the turnaround specialist stepped up its battle yesterday, offering to inject up to £1 billion into GKN's pension scheme.

Melrose said this represented almost twice the amount of GKN's plans to reduce the deficit in the scheme, and claimed that GKN's deal to tie-up its Driveline car parts division with US firm Dana would "orphan" GKN's aerospace arm with £3 billion of pension liabilities.

But GKN said: "These comments are misleading as to the true status of GKN's pension obligations post the combination of our Driveline business with Dana."

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

It comes as one of GKN's largest shareholders – Colombia Threadneedle – said it planned to reject Melrose's £8.1 billion takeover offer and gave its backing to the GKN board and its overhaul plans.

Colombia Threadneedle owns around 3.5 per cent of GKN and is now the fifth shareholder to come out against the Melrose bid.

But Melrose also lowered the minimum threshold for shareholder acceptance of the bid from 90 per cent of shares to 50.1 per cent.

On the pension plans, GKN group finance director Jos Sclater said: "A month ago, Melrose appeared to suggest that its plan to pay £150 million into the pension scheme was sufficient.

"Now it appears to have unveiled a £1 billion plan that would achieve less than GKN's own agreement with the trustees, at a greater cash cost which would erode shareholder value.

"I think our shareholders deserve better."

GKN shareholders will decide on March 29 whether to accept Melrose's bid for the company.

Meanwhile, Britain’s largest union, Unite said it had "no confidence" in Melrose’s vision or strategy for GKN after the firm refused to give guarantees on jobs, skills and investment yesterday.

In a full and frank exchange with Melrose bosses, Unite representatives pressed for concrete guarantees on levels of investment and where it would be targeted should Melrose succeed with its hostile takeover of GKN.

Yesterday's meeting followed recent warnings from GKN’s biggest customer, Airbus that it would be ‘practically impossible’ for it to give GKN any new work should Melrose succeed with its debt-laden takeover bid because of the uncertainty generated by its short-term approach.

Speaking after the meeting Unite assistant general secretary for manufacturing Tony Burke said: “Unite remains of the view that Melrose’s takeover would be bad for UK jobs, investment and GKN customers. After a full and frank exchange with Melrose, we received no sense that key personnel with the right experience are in place to manage the aerospace and automotive divisions.

“The refusal to offer concrete guarantees on jobs and skills, combined with no clear long-term strategy to drive growth and innovation across the business should concern shareholders.”

Melrose said all recent attempts to engage in "constructive discussions" with GKN have been blocked.