Commenting on GKN's full year results John Colley, Professor of Practice Strategy and International Business from Warwick Business School, said:

"GKN management’s actions seem to be following Melrose’s hostile bid plan. Indeed one wonders what GKN would have done without Melrose.

"The final salary pension scheme is to be closed, and margins are to be increased through ‘project boost’ to similar levels to those proposed by Melrose. The aerospace business is to be split from the automobile business which will have separate listings, making them far more vulnerable to takeover and the bid premium’s that would attract. Also, £2.5Bn will be returned to shareholders over the next three years, again as a response to Melrose.

"The results are less straightforward and operating profit appears to have fallen 14% following some adjustments in North America. If these are ignored then profits appear to be level with last year. So we are little wiser on GKN's performance.

"What we do know is that none of this would be happening without Melrose. We are still left with the straight choice between the two management teams and deciding which one is most likely to deliver.

"GKN has seen so much boardroom upheaval following disappointing results that it now appears to be run by the Non-Executive Directors. On the other hand Melrose’s team has a track record of extracting value. Both sides are promising the same actions but who will deliver?

"What we do know is that the workforce will be smaller either way which is exercising the minds of the Unions. The battle over potential foreign ownership of a defence supplier is more likely to occur in the future under either management team now."

27 February 2018

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