Melrose to spin off GKN’s automotive arm in break-up of engineering group
The turnaround specialist bought GKN in a controversial £8 billion takeover in 2018.
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Turnaround specialist Melrose Industries has confirmed plans to spin off the GKN automotive business in a move that will see one of Britain’s oldest engineering firms broken up.
Melrose, which bought GKN in a controversial £8 billion takeover in 2018, said it will demerge GKN’s automotive and the smaller powder metallurgy divisions from its aerospace arm into a separately listed company.
It is hoping to get shareholder approval for the spin-off in the first half of 2023.
The demerged company will become an automotive platform and is set to trade on the London Stock Exchange, but the name has not yet been revealed.
GKN Automotive supplies driveline technologies to the global motor industry, while the powder metallurgy division makes metal powder and precision powder metal parts for the automotive and industrial sectors.
Melrose will keep hold of GKN Aerospace, which makes airframe structures, engine components and electrical interconnection systems for the global civil and defence aerospace industry.
Details of the plans came as it reported widening first-half losses after booking higher costs.
It posted pre-tax losses of £358 million for the first six months of 2022, against losses of £275 million a year ago.
Melrose bought GKN for £8 billion in March 2018 after a bitter and protracted battle punctuated by Government interventions.
There was concerns at the time that it would look to break up GKN.
Under terms of the takeover, Melrose gave assurances that it would not sell the aerospace business for five years – until 2023.
Justin Dowley, chairman of Melrose Industries, said: “Since acquiring GKN in 2018 we have reinvigorated each business to achieve its potential.
“The proposed demerger now gives each an exciting opportunity to individually grow shareholder value through organic growth and acquisition in both platforms.”
GKN Automotive chief executive Liam Butterworth will take on the same role in the demerged business, as will finance director Roberto Fioroni.
Late last year, Melrose said the GKN automotive and powder metallurgy divisions had been hit by chip shortages and supply chain problems.
In its latest half-year results, it said the divisions are expecting the supply chain pressures to ease towards the end of 2022.