GKN to sell off assets as well as also return £2.5bn to shareholders

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GKN

Engineering giant GKN says This specific will sell off non-core parts of its business as well as also return £2.5bn in cash to its shareholders over the next three years.

The plans are part of its defence against a £7.4bn hostile takeover bid through Melrose Industries.

GKN’s brand new strategy as well as also transformation plan includes the sale of various businesses over the next 12-18 months.

Melrose said the plan was “long on adjectives as well as also promises yet desperately short on detail”.

Last month, GKN rejected the bid through Melrose, saying This specific “fundamentally undervalued” the firm.

GKN chief executive Anne Stevens said: “The brand new strategy brings clarity, accountability as well as also focus to GKN’s world class businesses as well as also will allow the group to attain world class financial performance.”

“Too often we pursued growth at the expense of returns, This specific will no longer be the case. The brand new strategy brings discipline, both financial as well as also operational.”

However Melrose has argued in which This specific could “deliver significantly greater benefits” to GKN’s shareholders than the current management team.

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GKN makes parts for the Boeing 737 jet as well as also Black Hawk helicopter, as well as components for Volkswagen as well as also Ford cars.

Last month, This specific said This specific would likely split the aerospace an automotive divisions into separate companies.

Outlining its transformation plan, This specific said “operational separation” had already begun as well as also the “formal” separation would likely take place “when This specific maximises shareholder value”.

‘Significant cash’

Last year, lower profit margins as well as also cash generation prompted GKN to conduct a wide-ranging review of its business. The company also warned on profits after uncovering problems at its aerospace division.

In January, This specific said a brand new two-year strategy called Project Boost would likely significantly increase cash flow by cutting costs as well as also expenditure, along with tighter pricing control.

“This specific strategy will be supposed to generate significant cash for shareholders inside the short term as well as also meaningful sustainable cash flows over the mid to long term,” said Ms Stevens.

In response, Melrose said GKN’s document was “long on adjectives as well as also promises yet desperately short on detail”.

This specific said GKN’s plan to return £2.5bn over the next three years compared with “an immediate £1.4bn in cash as well as also further cash payments inside the medium term” under the Melrose proposals.

Chairman Christopher Miller said: “Today’s document will be effectively a ‘jam tomorrow’ as well as also ‘trust me’ plea through a management team having a limited track record of delivering value for shareholders.

Both GKN as well as also Melrose saw their shares rise following publication of the turnaround plan.

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