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Melrose chief launches attack on GKN bosses for losing City's confidence

Alan Tovey
GKN is fighting off a hostile takeover bid from turnaround specialists Melrose - Copyright 2012 Bloomberg Finance LP

Melrose chief executive Simon Peckham has launched a withering attack on GKN’s bosses, branding them caretakers of the business with a “manager mentality” that is harming the company.

In an exclusive interview with The Sunday Telegraph, he claims that investors are losing faith in them.

“GKN has been run by people who don’t have an owner mentality, they have a manager mentality,” said Mr Peckham.

“It’s a business that has slowly but surely lost the support of the UK institutional investment community.”

Melrose’s hostile attempt to take over the maker of car and aircraft parts is building to a dramatic denouement. This weekend, two other major investors backed GKN.

GKN

Sanderson Asset Management said: “We oppose the offer and welcome the board’s plan to sharpen GKN’s focus on aerospace.” Pelham Capital said: “The action taken by management justifies a value closer to 600p, which is not reflected in the Melrose offer.” Both are top shareholders.

Last week, a number of influential voices picked sides in the £8.1bn battle. Aviva came out in favour of Melrose. Then Airbus, GKN’s largest customer, said it would be “practically impossible” to give GKN new work under Melrose’s control.

On Thursday, Jupiter Asset Management sided with GKN managers. Mr Peckham said GKN’s plans to merge its Driveline automotive business with US peer Dana had not been welcomed by investors.

He believes the move will land British shareholders with a tax bill as they will receive shares in the US business. Many institutional investors cannot hold foreign shares and will have to sell them if the £4.4bn merger proceeds, resulting in a tax charge.

GKN pension deficit

Mr Peckham said positive responses to Melrose’s offer from the likes of Aviva highlighted the extent to which shareholders are fed up with GKN’s performance under its management.

He also claimed that GKN’s response, which initially was to improve the business but then flipped to disposals, reveals desperation. “Their strategy is that they will do anything to stop our bid proceeding,” said Mr Peckham.