Melrose Industries Share Discussion Threads

[meanwhile] 20/1/2018 23:26

Mattboxy,
I think simple mathematics is prevailing in the GKN contest with Melrose. The immediate financial reward for GKN holders & the future prospects from MRO ownership is just not being matched by GKN. Sentiment is all GKN have on their side.
MRO being a british owned engineer and not a private equity fund makes them a much more preferred buyer than some of the potential U.S. names suggested as possible bidders. I suppose another UK engineer could enter the running but they're not showing up as yet. I don't think any are up to the job.

[mattboxy] 20/1/2018 17:27

Why do you say that meanwhile?

[meanwhile] 20/1/2018 17:20

The battle looks won now.

[sogoesit] 18/1/2018 17:00

No mood for taking things lying down:

[brexitplus] 17/1/2018 12:18

Steeplejack. Totally agree. In addition Vulcan and Elliot with about 6% of GKN shares want them to talk to Melrose. Yesterday Melrose also said that the funding is all set up. GKN can expect more pressure to talk and open their books. In the end it comes down to who institutions think will turn GKN round faster and better. A Nortek update would be useful since it is part of the deal, but institutions are probably being updated behind the scenes.

[sogoesit] 17/1/2018 11:03

GKN rejection:

[sogoesit] 17/1/2018 10:47

Offer details here:


These folks don't mess around... the pensions issue was covered in their presentation, by the way.

[steeplejack] 17/1/2018 10:15

Things seem to be moving in Melrose's favour.If the GKN pension trustees are concerned about the management of the pension deficit,they won't want a private equity outfit loading GKN with debt.Meanwhile,Melrose say that their calculations have taken account of the pension deficit and are known for keeping tight control of borrowings with a debt ratio of around twice EBITDA.Long way to go but Melrose's bid looks increasingly timely.

[grevis] 17/1/2018 10:15

Melrose Industries went hostile in its £7.4bn takeover offer for engineering group GKN after meeting with the target's shareholders.

GKN shareholders would be offered 1.49 new Melrose Shares and 81p in cash for each GKN share.

The offer now valued the shares at 430.1p, up from a previous value of 405p, Melrose said

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

"As a result the implied premium has grown from approximately 24% to approximately 32% since our approach."

"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."

[eipgam] 16/1/2018 14:40

GKN pensions plea

Times financial editor Patrick Hosking has been keeping an eye on GKN's pension fund trustees:

14.25hrs

[sogoesit] 16/1/2018 12:18

Don't know brexit+... my previous experience is that brokers ramp up prices/valuations before any transaction (paper purchase or equity raise). After deals are consummated the price then falls away after citing things like execution risk etc.
All relative to "inherent" value of course.

[brexitplus] 16/1/2018 10:39

Might suggest they think this is a done deal!!

[sogoesit] 16/1/2018 09:59

Goldmansucks today raises TP to 320 from 260 maintains BUY.
(Probably getting in on the "act")

[brexitplus] 16/1/2018 08:51

I’m certainly feeling positive about GKN. Vulcan says GKN should talk. I expect 450p as the final price. Melrose won’t overpay.if US PEs come in I hope the government would step in and keep GKN in its new form British. It’s whats best for GKN in the long run that matters. Melrose have been clever in their offer - not a takeover as such.

[steeplejack] 15/1/2018 21:56

It's only indicated.If Carlyle were to come out with something much more cash based then Melrose might well have to reconstitute its intended offer.It's early days.

[meanwhile] 15/1/2018 18:56

brexitplus,

If the terms remain the same as the indicated offer, there are no new shares offered to existing MRO holders.
The terms were 20% in cash (raised by borrowings, not a rights issue), 80% in new shares to GKN holders.

[steeplejack] 15/1/2018 18:49

We only have the roughest of ideas as to how the Melrose offer will be constituted .Perhaps a partial cash alternative might be made available to GKN holders and (with an ear to brexitplus's post)maybe that cash alternative could be provided by a heavily discounted issue to existing Melrose shareholders.If GKN holders were to receive 80% MRO stock and the bid goes through,then it's reasonable to assume that the Melrose price will be under pressure as GKN holders sell in the open market on receipt of MRO stock and indeed the marketmakers might well hold the price back in anticipation of selling.We also don't know how and if a competing Carlyle bid might be constituted.I'm happy to wait until i get fuller details.I'll just sit with my Melrose stock for now.

[brexitplus] 15/1/2018 18:36

Good question. No idea. A Nortek update would be useful.

At present, until Melrose commit I think it unlikely the price will rise much.

More interesting is if Melrose do as previously what price shares to existing shareholders will come in at with the normal large discount.

[meanwhile] 15/1/2018 18:25

I have a question relating to a particular scenario, an increasingly likely one.
For the purposes of this question, I am proposing the scenario of an offer of around 460p (some competent observers have suggested this figure) being accepted by GKN shareholders and the offer terms are as the current 80% MRO shares, 20% cash. 92p cash, 368p in MRO shares.

Does anyone have any thoughts or predictions of where the MRO price will go from here in the short term, that is in the period running up to acceptance of such a Melrose offer and new MRO shares being issued.?
In such a scenario The GKN price will now most likely creep up steadily to around the 460p expected to be offered. Forget other bidders.
But what about the MRO price. I think this is a tricky one. The higher the MRO price goes, the less new shares will need to be issued to GKN shareholders to cover their 368p and each new share will have more of the total business. For MRO holders, this would seem to be a driver for the MRO price to be urged to rise, by whatever means.
On the other hand GKN shareholders would benefit from a fall in the MRO price because they will then get more new MRO shares for their 368p.

Any thoughts on what/who will drive the MRO price?

[sogoesit] 15/1/2018 16:56

DementiaLiberalis?

and Dim Tim.... Mr Fishfinger!

[meanwhile] 15/1/2018 10:55

Cable will change his view on MRO when he reads up on them. He hadn't looked when he made his statement. Politics had drained him of any logical mental processes.

I believe he was of moderate intellect as a young man but has obviously lost it. Being the Liberal boss won't help either. Look what it did to Jeremy Thorpe, Menzies Campbell & Nick Clegg.

[brexitplus] 15/1/2018 10:54

No point in trying to get them to understand the truth. They are politicians and as such only interested in headlines and political capital. The fact that GKN would be a much better run Company, and paying more tax, is totally unimportant to them.

[bscuit] 15/1/2018 10:25

B+,

Those are the points Cable and others need to understand.

[brexitplus] 15/1/2018 10:07

Cable is an idiot. Anyway this is not a complete takeover. 57% shares with GKN shareholders. And it is two British companies, not a US takeover by Carlyle.