Melrose boss paves way for GKN sell-off four years after £8bn takeover

Melrose boss paves way for GKN sell-off: Future of aerospace firm – which built WWII Spitfires – thrown into doubt four years after £8bn takeover

The boss of Melrose last night paved the way for the core aerospace business of British engineering giant GKN to be sold into foreign hands.

Simon Peckham, chief executive of the FTSE 100 turnaround specialist, told the Daily Mail ‘all options’ were on the table regarding the future of Birmingham-based GKN.

He suggested this could include a sale to private equity or a stock market listing. The comments came four years after Melrose bought GKN for £8billion in a deal that met stiff opposition amid concerns the historic British firm could later be sold into foreign hands.

War hero: Spitfire Mk.Vb (pictured on memorial day in 2015) is one of 1000 aircraft built at GKN’s Castle Bromwich factory which could soon fall into foreign hands

A campaign to ‘Save GKN’ by the Mail was backed by defence industry experts, unions and politicians. But a sale went through, handing Melrose GKN’s aerospace, automotive and powder metallurgy divisions.

Asked about GKN Aerospace, Peckham said: ‘We could float it, we could sell it to a private equity house… all of which are options we think would be available.

‘If someone offers us the right price we will sell it.’

Asked whether he would favour a listing over a sale to private equity, he said the firm would look to find a ‘happy medium’.

He said: ‘We’ve got a responsibility to try and do the best for our shareholders. But we also have a responsibility to do the best for the business.

‘It may well be that we find a private equity house that has another investment that you could combine this with, and that would be very good for the business. 

It may be a strategic buyer who could take the business forward is the best.

‘Or it could be that floating the whole thing on the London stock market is the best answer.’

Deal maker: Melrose boss Simon Peckham said 'all options' were on the table regarding the future of Birmingham-based GKN

Deal maker: Melrose boss Simon Peckham said ‘all options’ were on the table regarding the future of Birmingham-based GKN

Founded in 1759, GKN is one of the UK’s oldest manufacturing firms and made Spitfire aircraft during World War Two. 

When it bought the firm, Melrose pledged not to sell the core aerospace division for at least five years, a commitment that is due to expire in the middle of 2023.

Peckham said an imminent sale was unlikely. ‘In the immediate future, we think there is far more value to be had for our shareholders from continuing to own this business,’ he said.

‘[GKN Aerospace] is the last asset in the Melrose group that we would look at selling.’

Despite that, there are fears it could suffer the same fate as other British defence and technology companies such as Cobham, Laird and Meggitt, which have been snapped up by private equity firms and overseas rivals.

Fierce criticism of acquisitions has spurred the Government into action, with Business Secretary Kwasi Kwarteng recently stepping in to block or delay several takeovers of British firms deemed vital to national security.

Peckham’s comments followed a capital markets day at Melrose in which it upgraded profit margin targets for the GKN Aerospace to 14 per cent as the industry recovers from a slowdown.

It unveiled plans for a £500million share buyback, following the sale of Ergotron, a US businesses, for £520million. 

The shares surged 11 per cent, or 15.6p, to 157.7p.

Despite its strong performance, Melrose said it was keeping its payout plans ‘under review’ as a result of ‘world events and market uncertainty.’