Monitoring Desk
LONDON: Airbus has warned it would be “practically impossible” to give new business to engineering giant GKN if it was bought by turnaround specialist Melrose.
GKN makes wing components and other key aircraft parts for Airbus, which is its biggest customer.
However, it is fighting off a hostile bid from Melrose, saying it fundamentally undervalues the firm.
GKN employs more than 59,000 people, with 6,000 in the UK.
Tom Williams, Airbus’s chief operating officer at its commercial aircraft division, said: “The nature of our industry is one that requires a commitment to long-term investment and strategic vision.
“The industry does not lend itself to shorter term financial investment which naturally reduces R&D budgets and limits vital innovation.
“It would be practically impossible for us to give any new work to GKN under such ownership model when we don’t know who will be the long-term investor.”
Earlier this week, GKN rejected what Melrose called its “final” offer. Melrose said the bid valued the company at £8.1bn.
GKN chairman Mike Turner said: “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.
“Its management lacks the relevant experience and its short-term business model is inappropriate for GKN’s customers and investors.”
Christopher Miller, chairman of Melrose, said his company “invests in its businesses for the long term”.
He added: “Under Melrose, shareholders and customers will be able to enjoy a considered and longer-term process of value creation, investment and business enhancement, which is clearly not an option under continued GKN ownership.”MPs’ concerns
GKN also makes parts for Boeing 737 jets and Black Hawk helicopters, as well as parts for Volkswagen and Ford cars.
Under the terms of the Melrose bid, GKN investors would receive 81p in cash and 1.69 new Melrose shares for GKN share they held. GKN shareholders would end up owning 60% of Melrose.
However, GKN says a fall in the Melrose share price has reduced the value of the cash and shares offer.
GKN has fought hard against the bid, offering to give back £2.5bn to shareholders and agreeing to merge its car unit with US company Dana.
The takeover approach has raised fears among unions and MPs that GKN, one of the UK’s largest industrial firms, will be broken up and sold to overseas owners.
The Pensions Regulator has warned that the Melrose takeover could affect the company’s ability to fund its pension scheme.
Last week, a cross-party group of MPs wrote to the Business Secretary, Greg Clark, saying the Melrose takeover should be blocked. (BBC NEWS)
