Melrose Industries Share Discussion Threads

[brexitplus] 11/4/2018 10:13

Yertiz

Very comprehensive.

Weather miserable. Off to Bristol to see aged relative. All day breakfast at local cafe. I came second in the Scalextric, my best place ever. Minis are terrible but Porsches brilliant.

GS and BoA likewise. Still lots of trading by arbitrageurs - money to be made.

Have read the Melrose Annual Report. Doing masses at Nortek. Very professional and productive.

Await negative postings.

[brexitplus] 10/4/2018 18:48

Me too. Damp and cold here. I’m off to Scalextric. Huge layout at a friends. 6 cars at a time. If we get 12 people we have teams. Lots to drink!!!

Enjoy your break.

[gettingrichslow] 10/4/2018 18:35

B+, have gone away to the sun/beach for a couple of weeks so haven't been following things as closely as I would normally. My post to Meanwhile was meant genuinely but he may think I was being sarcastic. I am just surprised that someone who is clearly concerned about the price paid for GKN and where share price growth is going to come from going forward would choose to be 100% invested in that single company.

[brexitplus] 10/4/2018 18:01

The Melrose Annual Report is now available on their website. Looks very impressive. Lots on Nortek.

[brexitplus] 10/4/2018 12:35

Getting, are you expecting a reply from Groin or is it Strain? I notice you put in a number. That might help!!!

[gettingrichslow] 09/4/2018 22:13

Meanwhile, are you still 100% in Melrose? For all of Melrose's attractions it does seem to be a fairly risky strategy to put all your eggs in one basket? Why not diversify a bit?

[meanwhile] 09/4/2018 19:59

City A.M. Monday 9 April 2018 4:37pm Melrose shorts build £1.3bn bet as sub-prime star Paulson shows his hand in GKN battle.

"Bets against Melrose Industries have hit fresh highs as hedge funds ramp up short positions against the would-be GKN owner.
In trades totalling £1.3bn, almost a third (31 per cent) of Melrose shares are on loan to hedge funds.
Melrose short positions have doubled over the last month, according to IHS Markit. With the UK government mulling an intervention, they have continued to rise since the firm's £8bn GKN approach was narrowly voted through by shareholders on 29 March. Such movement has been mirrored by a 10 per cent fall in the market value of both Melrose and GKN since the crucial deadline.
Meanwhile, regulatory filings revealed one of the most revered short sellers has built a material position against the UK turnaround house.
John Paulson, who came to prominence at the height of the financial crisis after earning around $4bn (£2.8bn) by betting against the US sub-prime housing market, has a 0.56 per cent – worth around £23m – short position against Melrose.
US hedgie rival Sand Grove has the biggest bet against the industrial turnaround specialist, holding a 2.74 per cent short position.
While rising short positions would usually signal hedge fund managers expect shares to fall, City sources said some institutions are eyeing an arbitrage opportunity on the assumption the Melrose takeover proceeds. Because Melrose's offer comprises a share and cash deal, there is an opportunity for funds to make a profit by buying GKN shares and shorting Melrose.
Hours after Melrose appeared to have claimed victory, business secretary Greg Clark said the government will launch an assessment on whether the takeover would pose security concerns due to GKN's involvement in the manufacture of military aircraft.
And it was reported earlier today the government is considering clamping down on short-term investors influencing crucial M&A votes. Clark is preparing to overhaul voting rules, the Daily Mail reported on Monday. However, Whitehall sources subsequently played down such suggestions, telling City A.M. no such plans were in place.
Last week, GKN was dealt a blow by ratings agency Moody's as it placed the FTSE 100 firm on review for a downgrade.
"Our review for downgrade stems from the takeover bid of Melrose, which has now been accepted by the majority of GKN's shareholders, and the related uncertainties about GKN's future shareholding structure, capital structure and business profile", said Moody's senior credit officer Matthias Heck,
"GKN's rating is already weakly positioned on a standalone basis. Our review will focus on the impact of Melrose as GKN's future main shareholder, which will depend on the final acceptance level of the bid, the proposed refinancing measures of GKN's debt by Melrose, and GKN's future business profile."
Melrose and Paulson have been approached for comment.

[meanwhile] 09/4/2018 16:08

It seems that MRO & GKN share prices are coming down to realistic levels.
I apologise in advance here for some simple maths. Some may not like it but they can do their own calculations.

The value of the combined group, without any firm proposals or plans as yet for the future :_
for the MRO bits, MRO was valued by the market, before the bid, at around £4.1B market cap. plus approx. 0.8B debt, so MRO businesses valued by the market at around £5B.
Before the bid, GKN was valued by the market at around £6B, Melrose paid around £8B (variable ) and, with MRO in charge, the market may value its businesses at around the £10B that Ms Stevens said they could be worth, with a bit of work.
This totals £15B for value of businesses in the combined group, less £4.5B debt, so giving a market cap. of £10.5B, a little over £2 per share.

So GKN shareholders who chose to keep MRO shares, rather than selling recently, are getting around 420p per share.

[losos] 09/4/2018 11:33

Yertiz - haha well spotted, might give a few others a smile so I'll leave it as is :-)

[minerve] 09/4/2018 11:18

I was a Boeing investor until recently. Had a very good return on them.

[minerve] 09/4/2018 11:17

The order books of Boeing and Airbus are both very good. An order here or there is pretty much noise due to their large order books.

[yertiz] 09/4/2018 10:20

Hi Losos. Not sure how I'd feel travelling in an aircraft made by a company called Boing! Sounds like a pretty uncomfortable mode of travel?

[losos] 09/4/2018 09:18

MEANWHILE - Ooops, think I got it wrong!! I thought Airbus had cancelled their contract with GKN in favour of Boing, I did think it was odd that Boing were making componants sorry was late evening for me and already half asleep haha.

[meanwhile] 08/4/2018 20:58

Losos,

I'm not sure we're talking about the same thing. Please correct me if I'm wrong about this though.
My reference to Airbus was the news that American Airlines will buy 47 wide bodied airplanes from Boeing, the 787 I think, rather than the Airbus 330 from Airbus. GKN supply parts for both planes, so we are not sure how GKN revenues are affected.

[losos] 08/4/2018 19:39

MEANWHILE - "and the Airbus order lost to Boeing"

'evening M - so now we know that all that bull about maybe having to switch supply if MRO win their bid was just rubbish.

No one can tell me that Airbus could make a decision about a fairly important supplier in a matter of a few weeks They must have been having meetings, phone calls, and endless informal internal discussions for many weeks (even months) about switching supplier.

[meanwhile] 08/4/2018 18:24

I was wondering how the vote might go if it closed tomorrow, rather than a week ago.
Since then we've had the Moody's credit rating caution, U.K. political opinion hardening against the takeover, and the Airbus order lost to Boeing, which may not itself mean reduced sales but is a reminder of the existence of 'unknown unknowns'.
Add to these the strengthening view that Melrose will be running GKN while wearing a straitjacket and I think we might have found a different vote if it closed tomorrow.

I can't think of anything in the last week to set against these negatives but others may.

[minerve] 08/4/2018 14:13

small investors or small minded investors? LOL

[brexitplus] 08/4/2018 13:48

Hi Losos

Thanks for your post. No heavy rain here but some drizzle which is just annoying for gardening. We are helping my wife’s 90 years old uncle clear some unwanted belongings, etc, which necessitated a trip to the recycling depot, and since we were near Tetbury popped in for coffee and cake. Yummy. Dinner this evening is roast chicken.

I tend to think a lot of small investors were glad to get rid of GKN at a good premium and did so at the earliest opportunity. Dana was, I think, the final straw. Others may disagree, but since I have filtered Groin and Strain I really don’t care one jot.

[losos] 08/4/2018 11:48

B+ Ref post 3338 I read the letter as saying that he was in favour of GKN staying independant until they started talking about selling off Driveline to an American company and giving them more than 50% (Thus control)

Like the writer I held GKN for more than 20 years (up to 2011) sold when it seemed things were going wrong. Bought back in when MRO bid was announced.

GKN were caught 'off guard' and were putting forward ill conceived plans which changed during the course of the bid and didn't instill confidence.

Ref. post 3339 - Interesting reference to all previous bids involving 'National Security' none of which seem to apply with Melrose The posturing politicians will always try to stick their oar in but I am quietly confident that when things settle down they will push off and turn their attentions to some other 'headline grabbing' subject haha.

I should be out in the garden, or walking the dogs, but it's pouring with rain here so I can't do either, My beloved Newfies wouldn't mind the rain but I do haha. Will go when it stops. Enjoy your Sunday roast (or what ever you're having.)

[brexitplus] 08/4/2018 05:47

A couple of weeks ago I suggested that the 5.76% vote for Melrose very early on would be important as these votes would be from probably small disenchanted GKN investors. In the end the majority was just shy of 5%.

The following letter published yesterday to the FT shows, I think, the thinking of some GKN investors.

Sir, I read Michael Skapinker’s article “Customers should have come first in the GKN battle” (April 5) with interest, although I do not agree with it in its entirety. I am a private investor with a smallish portfolio. I have held GKN shares for many years. My original holding was purchased more than 20 years ago.

When Melrose’s original bid was announced, I instructed my broker to do nothing as I have considerable confidence that GKN’s technology in electric motors for cars was world class. (As an aside, I drive an electric car.) When GKN decided to sell its driveline business to a US company, I instructed my broker to accept the Melrose offer as the only way in which this technology would remain in the UK for the foreseeable future, which I considered important. Had the GKN management shown that it wanted to retain the businesses under its present control, I would have supported it.

Mr Skapinker complains about short-term speculators, but these people/companies will have bought their holdings from long-term holders who had lost confidence in the GKN management. Is he really saying that when a bid occurs long-term holders should not be allowed to sell their holdings?

[meanwhile] 07/4/2018 18:01

I believe GKN make bits for the Boeing 787, which has been chosen in place of the Airbus A330. However, I wouldn't know the balance of GKN revenues from the 2 aircraft.
You might find this sort of breakdown in the GKN annual reports. Otherwise some knowledgeable person here may know.