Resistance Mounts To GKN Takeover.jpg Fokker Services

Resistance Mounts To GKN Takeover

The owner of maintenance provider Fokker Services is subject to a hostile takeover from manufacturing investor Melrose.

Fokker Services owner GKN has received some welcome support in its fight to resist a hostile takeover by manufacturing investor Melrose Industries.

Melrose submitted a “final’ bid of £8.1 billion ($11.3 billion) for GKN last week, despite objections from management and unions. 

On March 15, however, Airbus Chief Operating Officer Tom Williams implied that Airbus would stop awarding GKN contracts if Melrose became the new owner.

“It would be practically impossible for us to give any new work to GKN under such an ownership model when we don’t know who will be the long-term investor,” he told the Financial Times.

Melrose’s model is to buy companies and sell them once performance has improved, although sometimes it breaks them up in doing do.

A British parliamentary committee has criticized Melrose’s takeover, saying it doesn’t offer enough reassurance about jobs and investment at GKN.

"Melrose have given a sense of the likely direction of their post-offer undertakings, but there is a still a lack of detail in their commitments on investment and jobs and these currently fall short of being legally enforceable," said committee chair Rachel Reeves.

Airbus’ intervention may be more significant, however, since the aircraft manufacturer accounts for about one-fifth of GKN’s revenues.

GKN’s aerospace division produces airframe and engine components as well as transparencies for civil customers. It also offers aftermarket services such as fan blade repair.

“The comments from Airbus that stress the need for long-term investment and strategic vision in our industry emphasise our firmly held belief that Melrose is not an appropriate owner of GKN,” said GKN Chairman Mike Turner.

He added: “Its management lacks the relevant experience and its short-term business model is inappropriate for GKN’s customers and investors.”

GKN Aerospace, which includes military sales, saw its operating profit decline by 48% to £175 million ($244 million) in 2017.

TAGS: Components
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