GKN pushes ahead with demerger after rejecting £7bn takeover offer

Brent crude touched over $70 per barrel yesterday

Among other shares to rise on Friday, packaging and paper company Mondi rose 1.2 percent after a rating upgrade from Investec.

GKN also announced on Friday that it had appointed Anne Stevens (left) as chief executive with immediate effect.

GKN's board dismissed the offer from Melrose in a unanimous decision.

Investors have been calling for GKN to split its businesses as management persistently failed to meet targets to improve profit and cash flow despite growing sales.

The company said: "The Board of GKN has considered the Proposal... and has unanimously rejected it, having concluded that the Proposal is entirely opportunistic and that the terms fundamentally undervalue the Company and its prospects".

Under the proposal - which valued GKN at around £7 billion ($9.5 billion) - the shares would have been acquired with a combination of cash (20%) and new Melrose shares (80%). The former Ford Motor Co. executive, 69 will oversee the planned split, creating two companies with "distinct investment profiles and capital allocation policies", it said.

Stevens declares herself "confident that we can deliver more for our shareholders while improving what we do for our customers and supporting our employees".

GKN added that it was trading in line with expectations.

Bovis said it expected a stronger year in 2018
Bovis said it expected a stronger year in 2018

As of 10:34 GMT, GKN's share price had jumped 26.25 percent to 420.03p.

The company's autos unit, which makes drivetrain components, accounts for nearly half of sales versus just over a third from aerospace, though the latter generates more profit at 44 percent of the total.

October 13: GKN announces charges of 55 million pounds, including 15 million from the North American unit that Cummings once ran, after a review.

A second large writedown at the aerospace division in November saw the departure of chief executive-designate Kevin Cummings, the head of the aerospace division who had been set to take over the top job this month. The factory makes parts for every Airbus plane, including the newest A350 wide-body, guaranteeing years of work.

Technology company Smiths Group rallied 3.4 percent.

A bid battle is now likely as Melrose, which specialises in buying struggling businesses, turning them round and selling them at a profit with the proceeds given back to shareholders, will pursue its interest despite GKN's opposition.

The company said August 31 it had been busy exploring potential acquisitions over the summer of 2017.

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