GKN Aims to Reorganize After Spurning Takeover

January 12, 2018 at 3:38 PM

U.K.-based driveline specialist GKN plc has rejected a takeover bid from British turnaround specialist Melrose Industries plc, and announced plans to split its automotive and aerospace units into separate businesses. No timeframe was provided for the latter.

GKN also officially appointed former Ford Motor Co. executive Anne Stevens as the company’s CEO. Stevens had been serving in that role on an interim basis since November.

Melrose made its unsolicited offer—valued at more than £7 billion ($9.6 billion)—earlier this week, vowing to boost GKN’s slumping profits and cash flow. GKN’s board characterized the bid as “entirely opportunistic” and said it “fundamentally” undervalued the company’s worth.

On Friday, GKN announced a new two-year strategy called Project Boost that aims to significantly increase cash flow and trim costs. The company cut its profit outlook last October following problems with the aerospace operations in the U.S.

CEO-designate Kevin Cummings, who had headed the aerospace division, left the company in November. Stevens, who left Ford in 2006 after rising to chief operating officer of the company’s Americas operations, joined GKN’s board as a non-executive director in mid-2016. In addition to a 16-year career at Ford, Stevens headed Carpenter Technology and served on the board of Lockheed Martin.

GKN, which has more than 160 manufacturing facilities and some 58,000 employees worldwide, posted sales of £9.4 billion in 2016. The company’s stock price closed 27% higher on Friday.