GKN PLC (LON:GKN) saw its shares soar 20% higher in early trading as the blue chip automotive and aerospace components company revealed it has rejected a takeover proposal and also unveiled plans to separate its businesses.
Melrose Industries specialises in taking over troubled or underperforming industrial groups. But Melrose shares have subsequently climbed 7%, lifting the value of the offer to 422p a share. In 2015, Slaughters acted for the company on a £200m shares placement.
The GKN board described the Melrose offer as "entirely opportunistic" adding that "the terms fundamentally undervalue the Company".
The board of GKN said it had considered the proposal.
On the back of this news, GKN's shares hit their highest level in well over a decade. Those calls became louder after a profit warning in October, which was sparked by the difficulties at its aerospace business. The biggest factory, in St Louis in Missouri, makes air frames for F-15 and F/A-18 fighter jets.
The initiative will be headed up by current interim boss Anne Stevens, who has been appointed the firm's new chief executive with immediate effect. Now Stevens, a former senior executive at Ford, has been handed the job permanently.
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Engineering company GKN is long established in the United Kingdom and internationally with aerospace and automotive operations.
Instead, the firm confirmed in a statement on Friday it had chose to split out the automotive and aerospace into two separate companies as part of a two-year "transformation programme", ending months of speculation over the firm's future.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "The separation of the automotive and aerospace units has been on the cards for years, with little obvious crossover between the two businesses".
'Historically, the pension deficit has held the group together, but with the sprawling footprint likely to have contributed to recent profit warnings, the reasons for divorce now seem to outweigh the costs of splitting'.
Whether today's news will affect the Isle of Wight division is not yet known.
Within Friday's announcement, GKN alluded that fourth quarter trading was "in line with expectations" and said it still expects the full year's profit before tax to be "slightly ahead" of last year's figure of £678m.
Under the stock market rules, Melrose is now required to either announce a firm offer by 5pm on 9 February, or announce that it is no longer interested.