How GKN’s boardroom woes left it vulnerable to attack

They call it the corporate jungle, and not without reason. Life at the top of UK plc can be red in tooth and claw, and any sign of weakness or vacillation may be pounced upon by investors hungry for a more substantial financial meal.

Such is the case with the recent £7bn cash and shares bid made by turnaround specialist Melrose for troubled FTSE 100 engineer GKN. After being rejected out of hand as ‘entirely opportunistic’ by the GKN board, Melrose then turned hostile, upping the bid to £7.4bn, an increase largely attributable to the rise in Melrose’s share price after making the first bid. That, plus the fact that GKN’s shares have now hit an all-time high of 442p, is a pretty unambiguous sign that the market is up for the deal and that GKN now has a real fight on its hands.

Melrose wasn’t likely to retire without a fight, especially after it received the blessing of US activist investor Vulcan Venture Partners, which holds around 4% of GKN’s shares. Vulcan’s boss CT Fitzpatrick stated in an email yesterday that he wanted GKN to open negotiations with Melrose.

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