Melrose plans to keep a tight grip on the reins when it spins off GKN’s car business on the London Stock Exchange in the spring.
- The spin-off will be Melrose’s last move after it bought GKN for £8.1bn.
- Melrose has restructured the business, closing GKN’s automotive engineering plant
- It now plans to separate GKN’s aerospace operations from the automotive business.
Melrose plans to keep a tight grip on the reins when it spins off GKN’s car business on the London Stock Exchange in the spring, the Mail has revealed.
The spin-off will be the latest move by Melrose, which buys up struggling industrial companies, turns them around and sells them, after it snapped up engineering giant GKN for £8.1bn in a hard-fought takeover in 2018.
Dating back to the industrial revolution, GKN’s search for Melrose had been the biggest hostile takeover battle since Kraft’s move at Cadbury a decade earlier.
Melrose has since restructured the business, including closing GKN’s Birmingham automotive engineering plant with the loss of 500 jobs in 2021.
The Erdington site was famous for manufacturing drivetrains for the automotive industry, with customers including Jaguar Land Rover.
Make changes: Melrose’s pursuit of GKN had been the biggest hostile takeover battle since Kraft’s move at Cadbury a decade earlier
The late Jack Dromey, then a local Labor MP, described the lockdown as a “hammer blow” for Erdington, one of the UK’s most deprived areas.
In another twist to the saga, Melrose now plans to separate GKN’s aerospace operations from the auto business to list the latter on the London Stock Exchange in April, renaming it Dowlais.
The name Dowlais is a nod to the town in south Wales that was home to the industrial revolution-era steelworks of the Guest family, one of the founders of the original Guest, Keen and Nettlefolds, later renamed GKN.
The new company will be led by Liam Butterworth, appointed by Melrose to lead GKN Automotive in 2018.
“The hard work and restructuring has been done,” according to a GKN source.
But investors hoping for a clean break will be disappointed. The Daily Mail can reveal that Simon Peckham, the founder and chief executive of Melrose and architect of the GKN deal, and his chief financial officer Geoffrey Martin will become non-executive directors of the newly launched firm, with Melrose also retaining a 3 per cent hundred. bet.
“We don’t want to lose their knowledge,” the source added.
The spin-off was announced in September and Dowlais’s prospectus is due on March 3 before listing the following month. The float is expected to be one of the largest on the London Stock Exchange this year, with annual revenue of £5.2bn.
