Melrose Industries Share Discussion Threads

[gettingrichslow] 25/11/2018 19:12

Melrose weighs options after 'low-ball' bids for GKN unit

Sky News25 November 2018, 18:58 GMT

The industrialists who bought GKN, the British engineering group, in a controversial £8bn deal this year are weighing options for one of its key divisions after receiving a string of "low-ball" takeover offers.

Sky News has learnt that executives at Melrose are deciding whether to press on with an immediate auction of GKN Powder Metallurgy following initial bids last week valuing the business at about £1.6bn.

That figure was well below analysts' forecasts that GKN Powder Met would command a price of £2bn, and has raised the prospect that Melrose may halt the sale process.

"They will sell the business, but it may not be through this particular auction," a person close to Melrose said on Sunday evening.

Sources said that Apollo and PAI Partners were among the private equity firms which tabled indicative offers last week.

Any decision to abort the sale of Powder Met would disappoint its new owner's shareholders, who were informed of the plans as part of a trading update several weeks ago.

It would also have consequences for GKN's pension schemes, which were promised part of the proceeds of asset disposals during Melrose's contentious takeover bid earlier this year.

Jefferies and Rothschild are advising on the Powder Met sale, which was put on the agenda by GKN's board as part of its defence against Melrose's hostile bid.

Powder Met makes high-performance components for automotive and industrial applications through two main divisions.

It manufactures for 3,000 customers around the world, producing 13 million parts every day.

Melrose's £8bn raid on one of British industry's most famous names triggered a political firestorm which abated only when Business Secretary Greg Clark secured binding undertakings from the Melrose board about their stewardship of GKN assets.

Under the terms of its deal with the government, Melrose must give ministers "early visibility" of potential bidders for any GKN operations with national security implications.

Mr Clark or his successors‎ would also have a veto over any such sale.

Melrose also offered a number of other commitments such as retaining GKN's aerospace division for at least five years, and maintaining research and development spending at pre-takeover levels.

The team of businessmen who founded Melrose have enjoyed huge success with their approach of buying, improving and selling poorly performing industrial businesses.

However, their hostile bid for GKN was on an altogether different scale ‎to any of their previous acquisitions.

GKN's board, led by the City veteran Mike Turner, claimed that Melrose's team had insufficient expertise or long-term focus to manage aerospace and automotive businesses with global customers such as Airbus and Jaguar Land Rover.

A fractious battle came to an end in March, when just over 52% of GKN's investors voted in favour of the deal.

The tussle generated more than £100m in bankers' fees, while Melrose has pledged to eliminate GKN's pension deficit with up to £1bn in contributions over the next five years.

‎Melrose is also progressing plans to sell other GKN‎ businesses such as Off-Highway Powertrains, which is expected to fetch a more modest sum.

The company has also said it will review its boardroom pay policies after a revolt at its annual meeting earlier this year saw nearly a quarter of shareholders oppose payouts of more than £40m to each of its top four executives.

A spokesman for Melrose declined to comment on the auction of Powder Met, while PAI also declined to comment.

[meanwhile] 25/11/2018 18:17

Now, it's Sunday, the Lord's day and a day of rest, so let's have no nastiness tonight; let's all just get along.

My earlier post on Mrs May might have seemed like an act of nastiness, but it was in fact, a caring commentary on her performance in carrying out the will of the British people.

Now, come on now.

[brexitplus] 25/11/2018 17:17

Getting. Is Neil Woodford presenting the winning prize, or Terry Smith? I understand Warren Buffet had declined for fear of being bored to death by someone who claims to be a better investor than himself.

[gettingrichslow] 24/11/2018 21:47

Keyno, it's far from pointless! The prize for the winner is a signed photo of Ryelodge/Meanwhile's wallet (was A4 last year, probably A5 this year). Last placed person has to have breakfast at Bill's with Minerve in some awful town in the North. Mattboxy is current champion. B+ won the one before. Make no mistake, this is a prestigious competition that has far reaching ramifications in the investment world.

[keyno] 24/11/2018 19:39

Thanks for the invite, grs but trying to guess a share price in this market is like trying to guess what you had for breakfast - utterly pointless and quite impossible.

Out of interest is the prize a Mars bar? Or just to be able to bask in the the glory?

[gettingrichslow] 24/11/2018 17:13

Keyno, I don't think you're the same person as Meanwhile. Your posts are far too logical and lucid for that to be possible! Would you like to enter the Xmas share price competition? Closing price before the Xmas break?

[brexitplus] 24/11/2018 16:57

Yertiz

Well done Exeter.

Good England win v Aussies and on top in the cricket.

And the big surprise, an Argyle win against a team higher in the league. Whoopee!!!

[meanwhile] 24/11/2018 12:34

Not at all, Keyno, in your last sentence. I won't even suggest you clear off. Your theory is a very valid possibility and one I used to believe in myself.

But it doesn't explain to me why Mrs May has run this almost completely on her own, when I would have expected her to share or shift the blame to others under this theory.
It also doesn't explain why Mrs May has never, to my knowledge, said anything positive about our position when we have left.

Your theory makes Mrs May purely incompetent rather than treacherous and I suppose either is valid.

By the way, getting thinks we are the same person.

Just seen jackdaw's latest.
I think she had a full hand to play but didn't play it. Are we getting back our fishing waters? I don't see that anywhere.

[jackdaw4243] 24/11/2018 12:23

To be fair Mrs Teflon May didn't have a particularly strong hand to play.

We are only the second largest contributor to the E U's budget

Five other Countries chip in the other 21 receive.

Taking back our fishing waters from the French will be welcomed by their fishermen as a plus as the do not need to go to sea.

I believe we are the second largest importer of Bavarian Cars, fewer cars produced means less pollution in Germany, more German workers available for low paid work hence fewer immigrants.

How did she stand a chance :-)

[gettingrichslow] 23/11/2018 19:29

Ryelodge, I agree with you there - I want us to be 'dining in various other restaurants which are offering better value'. Do you want to enter the Xmas share price competition?

[meanwhile] 23/11/2018 17:47

"You are either at the table or on the menu".

I'm not a big fan of these cryptic comments that many latch onto and can even begin to define a particular situation.
In this case, for example, you could also be 'not in the restaurant'.

[jackdaw4243] 23/11/2018 17:20

Off Topic but see what the weekend brings

The deal that appears to be on the table is pretty much what was possible, and optimal. If Theresa May plays her whip right, the UK will effectively exit the political aspects of closer European unity, while remaining within the customs area by agreeing to meet European standards and rules.

I am well and truly undecided and prepared for others to make the decision for me, I do recall a comment made by Stanley Johnson on SKY
"You are either at the table or on the menu"

MRO had a good day considering the state of play

[gettingrichslow] 23/11/2018 17:07

Meanwhile, is that your entry then (198p)? Is Ryelodge entering too or do you only want one go?

[brexitplus] 23/11/2018 16:38

Another positive day for Melrose and up compared to the FTSE100 down. Volumes reducing.

I hope my Christmas guess of 186p is horribly wrong on the underside. £3 by Christmas anyone?

[meanwhile] 23/11/2018 14:52

If we're guessing the MRO price by Christmas, I would guess at 198p, on the expectation of positive news of some sort by then.
I think it's very dependent on the course of brexit though.

[jackdaw4243] 23/11/2018 14:03

Minerve

Broke a rule added to my offside position in BAB, I see you are there as well.

[ryelodge] 23/11/2018 13:35

Certainly some class acts on this board.

[minerve] 23/11/2018 11:35

jackdaw4243

RR's best selling engine is expected to be sold at cost within a couple of years. That will make a significant difference on the accounts going forward.

[jackdaw4243] 23/11/2018 11:28

Well that will be the kiss of death on some of your Christmas predictions added a few at £1.78 ish

Has anyone followed the decline of GE after a disastrous share buy back policy, they are down to $8.00. with a mountain of debt. I can,t see Mr Trump letting the U S's largest engine manufacturer go bust but there may be an upside for R R and maybe they could start selling engines at a profit.

[meanwhile] 23/11/2018 10:39

A few more from you today, yertiz, and I'll be looking at one.