GKN Share Discussion Threads

[minerve] 11/2/2018 17:09

MEANWHILE

When Melrose buy companies I thought the engineers remained the same? This has nothing to do with engineering/quality of engineering and everything to do with asset stripping and redundancies to make the figures look better. They are financial engineers are they not? What engineering talent do they have? I bet none of them have ever picked-up a spanner or discussed something like tolerance or MTBFs.

[meanwhile] 11/2/2018 17:00

For all those GKN holders, still sceptical about Melrose's pedigree, in Elster we have a good example of the value Melrose have brought to British Industry.

Elster, a German owned company, bought in 2012 by Melrose for £1.8B. So £1.8B goes from UK shareholders of MRO (raised via the rights issue) into german pockets, and presumably their stock market.
Very bad so far, but 3 years later, £3.3B came back to the U.K., from U.S.A., when Elster was sold to Honeywell. Net result, £1.5B into the UK.

This turnaround would also throw some doubt on the superiority of german engineering.

[meanwhile] 11/2/2018 15:04

tbow112,

Elster.

[losos] 11/2/2018 13:01

Minerve - "it took a while until the broker could release me of the pain!"

Been there, done that, haha (ID Data in mmy case)

[tbow112] 11/2/2018 08:25

Can anyone remember one of these "better management" stories that turned out to be true ?

[meanwhile] 09/2/2018 17:43

No. Minerve, little divergence. The 2 shares moving together, GKN a couple of % above the current offer value.
You could have sold on announcement of the bid, ~ 450p. But you'll do better than that if you hold on for a while after completion. 80 pence + 1.49x300p would be OK for you I expect.
Quite possible if the market holds up and doesn't collapse, of course.

[minerve] 09/2/2018 15:51

Thanks for the update MEANWHILE. Has the MRO share price diverged from its track of the GKN price?

[minerve] 09/2/2018 15:50

Interesting story Loses - amazing what you can find in your attic! I had some Marconi shares once that I had forgotten about. They were worth zip, but I used to get literature from a broker updating me on their insignificance. I couldn't even sell them as the value was below the broker's trade charge (which caused a computer rejection of the trade) and so it took a while until the broker could release me of the pain! LOL

[meanwhile] 09/2/2018 15:31

Yes, they could, but that would dilute MRO holders. A gain in the MRO price is better for them.

[meanwhile] 09/2/2018 14:56

Melrose offer worth less than £4 now.
MRO bosses powerless of course but results in few weeks could change that.

[delboy ars mad] 09/2/2018 13:36

My Worthington shares are coming out of suspension soon . They are trading as whetstone on Britdaq. Last time they went up from 3p to £2 in 3 months happy days

[losos] 09/2/2018 13:18

Sogoesit - "I used to own GKN shares but gave-up in desperation of the lack of opportunities seized (helicopters being one)"

As it happens I have just been going through a lot of old paperwork that was gathering dust in the loft. I find that I too was a GKN shareholder from 15 Sep 1987 and used the DRIPS to add more twice a year, it became what (for me) was a large holding. (I even have photocopies of share certificates because that was what we used in those far off days haha)

Somewhat reluctantly I sold my entire holding on 27 May 2011 mainly because I had by then chucked the 'day job' and needed investments which gave a reasonable return. It did seem to me that over those 24 years the 'return' had been diminishing. It was also not clear in 2011 where the aerospace business was going.

In 2017 it would seem GKN head office didn't know much about what the US aerospace business was doing either which resulted in a planned CEO from over there suddenly having his 'job offer' taken away.

I feel I was loyal to GKN for 24 years, and wanted to suppport a British company with some world beating products (THe CV joint being one) but in 2011 things were not going well.

I do have a small MRO holding. As you and others have pointed out MRO have all British execs whereas GKN currently has one US CEO (Albeit with good credentials)

If MRO do what they normally do then in my view GKN could return to the market as two seperate companies, one a world leader in automotive drive systems and one a world leader in aerospace componants.

I offer the above as 'food for thought' and do not wish to side with or against anyone on this board.

[minerve] 08/2/2018 18:39

Sogoesit

I have looked at the offer document. I referenced it above when I set-up the thread.

I can't argue with what you have said. I would prefer GKN to better manage itself with the new CEO from Ford - and increased pressure from shareholders - rather than Melrose who will want to take a disproportionate return of value.

Although I accept increasing responsibility to engineers etc.. can be positive I have also witnessed the opposite affect where engineers end-up becoming demotivated as they spend more and more time doing non-engineering activities.

I hold GKN, and I am trying to keep an open-mind on Melrose, but I just can't help feeling they are just another sharp financial engineering outfit when all said and done - something this country could better do without.

Good luck to you anyway. :)

[sogoesit] 08/2/2018 18:10

Hi Minerve,
I don't think you've read the offer document. MRO propose cutting costs by cutting upper management layers and giving control to the operational management layer (i.e. the layer above skilled workers... or, to put it another way, the engineers who know their products and, hopefully, their markets.)

Good for you on founding an engineering company; great stuff.
I'm an engineer too but have worked-in, and managed, organisations with very lean management... 3-4 layers at most. Having devolved power to the "work face" wherever I've been responsible I can say that that is certainly motivational for all staff in an organisation.... and. more to the point, highly productive. With imagination, people who work at the "coal face" can be highly productive when given the chance to express themselves and in an open environment! Getting the right culture is critical and my view is GKN don't have that right now. Engineers are not the only critical components in an organisation... marketing should be prime, hopefully peopled by commercial engineers (not something that common 'tho).

How many layers of management does GKN have and how dispersed is their manufacturing base?
I used to own GKN shares but gave-up in desperation of the lack of opportunities seized (helicopters being one). I've owned MRO shares since the early 2000's. I'm pretty sure they know how to manage technical organisations.... or letting them manage themselves properly!

[minerve] 08/2/2018 15:48

Sogoesit

Who is saying they are not investing enough in R&D? You are assuming money made through improved margins will be re-invested in the company and put to good use but Melrose have their own plans giving themselves a collective bonus of up to £285M. How does that improve competitiveness?

I have founded an engineering company (with others) and I am an engineer and I can tell you a fact that a company like this is only as good as its engineers. If you cut costs and by doing so worsen morale and working conditions you end-up losing the good engineers who create the real long-term wealth by the know-how of better products and building them better. The financial engineers don't add wealth at all in this way - they extract it.

[meanwhile] 08/2/2018 14:03

Agree. And more employment, more suppliers, more tax.

[sogoesit] 08/2/2018 13:38

In my view that is not a good test of competitiveness.
You may not remember but Rolls Royce once attracted aero-engine customers but went bankrupt. If there is not enough profit to invest in R&D a company in the technology business will die.
If profitability (margins) can be improved there will be more capacity for R&D and thus improved competitiveness... attracting more and higher paying customers.

[minerve] 08/2/2018 09:39

Hi Sogoesit

But it is competitive - it is getting the business.

[sogoesit] 08/2/2018 09:30

Government interference in business is, in principle, a bad idea unless there are significant strategic (defence?) reasons.
Strangely, on this score, GKN is headed by non-UK management whereas MRO is not... if we want to be nationalistic.
However, improving the competitiveness of a UK business must be in Britain's best interests.

Just some complementary information from my point of view!

[minerve] 07/2/2018 14:46

Thanks MEANWHILE - I will take that as a complement. I am not Vince Cable though. :)

Actually, I think the article is SPOT ON!

[meanwhile] 07/2/2018 14:34

Yes, an interesting article from the Guardian.
The first paragraph & the last 2 quoted by Minerve are sensible. The remainder relating to Melrose's bid for GKN is ill-researched and as a result, is complete rubbish in several respects. For example, to suggest that 50 Melrose staff at HQ run their engineering businesses is nonsense.
Did Vince Cable write this article, I wonder?

We are all operating under pseudonyms, so we could, each of us, be anybody. But I have long believed that some contributors use parts of their real name in their pseudonyms. For example, using the first & last letters of their real name in their pseudonym.
Taking the last 2 letters of Minerve, ve, gives the first and last 2 letters of the name Vince Cable.
Minerve, old chap - I believe you ARE Vince Cable.

[minerve] 07/2/2018 11:43

A interesting piece from the Guardian brought to my attention via FT Markets Live:



I agree with the following:

" Mrs May should trust her instinct that the shrinking of manufacturing coincided with the emergence of a more divided Britain. She should come up with an industrial strategy which recognises that too much surplus is being redirected from enhancing productivity to speculative activity.

This would see a wider national interest test for takeovers; require a higher threshold than just the majority of shares to buy a company; and restrict short-term investors such as hedge funds from having a vote in mergers. Such measures would allow ministers to extract concrete commitments from corporates for the benefit of wider society. Other nations offer firms a degree of protection from hostile takeovers without damaging investment flows. It’s time that Britain did too. "

[meanwhile] 05/2/2018 21:28

Current offer is around 405p

[jimee] 05/2/2018 19:30

I am wondering, should I take the money and run?