Melrose presses on with GKN bid despite reporting a loss for the year

Melrose is ploughing ahead with its hostile bid for GKN despite reporting a loss for the full year.

The figures

In the year ended December 2017, the industrial turnaround specialist reported a pre-tax loss of £27.6m for the year, down from a £69.3m loss the previous year.

The loss came as the company incurred “significant” restructuring costs at US ventilation and security systems producer Nortek, which it bought in 2016. A decline of the core gas turbine market for its turbogenerator business Brush also hit profits.

Without those costs, the firm made a pre-tax profit of £257.7m, up from £96.4m the previous year.

However, Nortek helped boost revenue for the full year from £889.3m to £2.1bn.

The firm hiked its dividend by 91 per cent to 4.2p per share.

Why it’s interesting

Melrose is running full steam ahead with its £7.4bn bid for GKN despite the embattled engineering giant arguing the offer undervalues the company. It has attempted to win shareholders over by insisting Melrose’s management team lacks experience.

Christopher Miller, chairman of Melrose, said: “We are convinced that GKN would gain significantly from becoming part of an enlarged £10bn UK industrial powerhouse, benefitting from the proven Melrose operating model.”

The firm has pointed to the improvement of its Nortek business to show that it is well-placed to proceed with the deal.

“We are delighted with the performance Nortek is achieving freed from the previous culture of ‘head office knows best’. Substantial long-term value is being created with significant investment in new technology, new products and operations,” Miller said.

The deadline for shareholder acceptance of the deal is set for the start of April.

Read more: GKN condemns Melrose’s “low price and high risk” offer as clock is ticking