GKN Pledges Demerger to Keep Hostile Bidder At
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the times | Wednesday February 28 2018 1G M 47 Business GKN pledges RICH LEGG/GETTY IMAGES demerger to keep hostile bidder at bay Deirdre Hipwell over of GKN is the first for a FTSE 100 company since BHP’s abortive move on A commitment to demerge its aero- Rio Tinto in 2008. It has provoked a space and automotive businesses has furious war of words between the two, been made by GKN in an attempt to see with Melrose claiming that GKN is off a hostile takeover bid by Melrose. badly run and its target hitting back The engineer confirmed that it with accusations that Melrose is a cor- would list the divisions separately by porate raider that could put GKN’s the middle of next year to create “two long-term future at risk. strong companies with investment- The demerger plan announced yes- grade balance sheets”. terday is part of GKN’s “Project Boost” GKN said that a demerger was a tax- strategy that promises to return efficient solution and one that would £2.5 billion of cash to shareholders over also support its pension liabilities, add- three years. It also plans to sell some ing that it had reached an agreement assets, including its Powder Metallurgy with the pension trustees. division, return cash through enhanced It promised to carry out the de- dividends and improve its margins. In merger as it reported a 16 per cent drop all, GKN expects Project Boost to deliv- in its annual underlying profits. Most of er a recurring annual cash benefit of £340 million from the end of 2020. brand to Antiques Trade The company said yesterday that Gazette. The regional underlying pre-tax profits had slipped Auctioneers cashing auction houses’ overall A pocket globe from 1782 is by 16 per cent to £572 million, on sales market share has edged among the rare items due to £340m that rose 11 per cent to £10.4 billion. Its up from 24 per cent in be sold at Britain’s thriving Annual cash benefit GKN expects from trading margin fell from 8.2 per cent to in on urge to Flog It! 2015 to 26 per cent in 2017, regional auction houses Project Boost strategy after 2020 6.4 per cent in the year to December 31. according to new figures. GKN Anne Stevens, chief executive of he growing and they have left much of the Several have responded and produced by John GKN, said that it needed to employ a seemingly lower-hanging fruit to by hiring extra staff and Newton, for between the fall was down to problems in its “renewed focus on strong margins and irresistible urge provincial auctioneers. adding to their specialist £3,000 and £5,000. North American aerospace structures cash generation” as she set new trading of Middle For more than a decade, sales lists, which have It is not only cheaper division, where it had to take a £112 mil- margin targets of at least 14 per cent for England to pick the Big Four’s helped to boost turnover. lots that are sold at lion one-off charge. Its statutory pre- its aerospace division, at least 9.5 per Tout a family heirloom and international salerooms Many of the smaller regional auction houses. tax profit rose by 125 per cent to cent for automotives and 11 per cent for flog it has driven a boom have stopped selling houses are selling more An early American £658 million. the group by 2020. in smaller, regional objects in the £500 to lots online each year, porcelain teapot was sold GKN is a British engineering com- Christopher Miller, Melrose’s chair- auction houses (Deirdre £5,000 price bracket, a which can drive the this year for £460,000 at a pany with global sales of more than man, dismissed GKN’s results and Hipwell writes). move that last year hammer price higher and Woolley & Wallis auction £10 billion. It makes parts for some of strategy as “full of long-term promises The craze, popularised culminated in the closure swell sales. in Salisbury to the the world’s biggest aircraft and vehicle and more short-term actual misses”, and encapsulated by the of Christie’s in South Items sold at regional Metropolitan Museum of manufacturers, including Airbus, Boe- and added: “They include a rushed plan BBC valuation and sale Kensington, London. In auctions can range from Art in New York. The pot ing and Ford, employing 6,000 people to demerge aerospace and automotive, series Flog It!, has stark contrast, regional Australian Kangaroo issue was only the seventh piece in Britain and 53,000 in total. which begs the question whether the highlighted a market houses accounted for stamps to fine clocks, known to be from the Melrose is a London-based conglom- priority of Project Boost has been otherwise dominated by more than a quarter of the barometers, scientific John Bartlam factory in erate that has made a fortune for its superseded by the dismemberment of the London’s Big Four market last year, with instruments, as well as art Cain Hoy, South Carolina. investors by buying underperforming GKN in the next 15 months. auctioneers of Sotheby’s, combined sales of more and antiques. Fellows, which is engineers, shaking them up and selling “GKN deserves better than this. We Christie’s, Bonhams and than 500 auctioneers Next month, Dreweatts Britain’s largest regional them. It owns companies including believe Melrose is the only team with Phillips. Yet while they rising from £763 million in & Bloomsbury Auctions in auction house, led last Brush, Hawker Siddeley and Nortek, the ability to unlock its true potential.” dominate the 2015 to £821 million, Berkshire are offering a year’s league table, with the American ventilation group. Both GKN and Melrose were steady, multimillion-pound world according to rare George III 2.5in £17 million of sales in the Its attempted £7.4 billion hostile take- at 430¾p and 225½p, respectively. of fine art and antiques, Thesaleroom.com, a sister pocket globe, dated 1782 year to December. Qataris pour scorn on Carillion claim Silver linings overshadowed Gurpreet Narwan finished £5.5 billion Msheireb develop- ment in the centre of Doha became a by growing clouds at miner The Qatari company accused of with- focal point as Carillion’s directors holding payment to Carillion has hit sought to blame Msheireb for contrib- Emily Gosden lion in 2016, as silver production hit a back at suggestions that it contributed uting to the group’s demise. record 58.7 million ounces thanks to a to the group’s collapse, claiming that it Msheireb said that the claims made Rising costs have prompted Fresnillo to boost in operations at its San Julián was itself owed £200 million. by Keith Cochrane, Carillion’s chief warn of a challenging year ahead after mines. It also benefited from a 35 per MPs said that a “litany of excuses” for executive until the collapse, that it had profits fell short of expectations cent increase in zinc prices and 25 per the failure of Carillion was “fast not been paid by the Qatari company yesterday. cent rise in lead prices. unravelling” after Msheireb Properties for 18 months before the business had Shares in the Mexico-based precious However, higher-than-expected cost wrote to the work and pensions com- Carillion has been closely involved in failed were “factually incorrect”. metals mining group fell by more than inflation of 6.4 per cent took the shine mittee accusing Carillion of mis-stating the overhaul of the centre of Doha Carillion “was paid at regular 4 per cent, despite announcing a divi- off the result and profits of $1.06 billion the value of work it had completed in monthly intervals . without excep- dend that was higher than the stock before deductions were just shy of the centre of Doha. relating to further delays”, the Qatari tion, in accordance with the conditions market had expected. the $1.09 billion that had been forecast In the letter, Msheireb Properties company said. Instead, Carillion owed of the contract” until January 2017, Fresnillo, which was listed in London by analysts. Cost inflation could run rejected evidence submitted by Rich- Msheireb about £200 million, compris- Msheireb said. In 2017, payments were in 2008, owns the world’s largest at about 7 per cent this year, Fresnillo ard Howson, Carillion’s chief executive ing “good faith overpayments”, which it reduced after an agreement that primary silver mine and is one of predicted. until last July, who had told MPs that he had made to assist the ailing outsour- Msheireb “would pay its subcontrac- Mexico’s biggest gold producers. The company said that inflationary “felt like a bailiff” when attempting to cer, direct payments to subcontractors tors directly as Carillion was unable or It has seven operating mines in the pressures over the past year had obtain £200 million for the project. that Carillion had not paid and unwilling to do so”. country and produces lead and zinc included a 3.3 per cent increase in His comments, which are said to damages caused by contractual delays. MPs noted that Carillion’s accounts alongside the precious metals. The first wages, a 29 per cent jump in electricity have infuriated the Gulf country’s Britain’s second-largest construction suggested that the amount owed at the Mexican company to have its primary prices in Mexico and a 22 per cent rise ruling al-Thani family, were entirely company went into liquidation last end of 2016 was £72 million and said the listing in London, Fresnillo is a consti- in diesel prices following the country’s “misleading” and referred to “the value month with debts and pension liabili- contradictory positions reinforced “the tuent of the FTSE 100.