Engineering giant GKN has rejected a £7.4bn bid from Melrose Industries saying it is being undervalued in the bid.
Melrose had said that it would provide greater benefits to GKN’s shareholders than GKN could ever do.
After declining the first bid offer, changes were made in the bid but it got rejected too.
Melrose is ready to give 430.1p in cash as compared to the previous amount of 405p along with shares for GKN.
Under the updated terms of the bid GKN shareholders will be owning 57% of the merged group and would become major contributors to the future value creation of both the businesses.
But in its statement issued yesterday, GKN’s board stated that the proposal from Melrose would blur the opportunities for GKN shareholders that the board believes are present within their group.
Last year, due to lower profit margins and lacked cash generation, GKN had to rethink its business operations.
It also declared the plan to split its aerospace and automotive divisions.