Melrose invokes spirit of Right Said Fred in GKN bid battle that's yet to get properly hostile

Hostile takeovers are supposed to be fun for those of us sitting in the stands; high stakes corporate slugfests in which the bidders portray the bosses of the target as incompetent fools, while the latter make the bidders out to be the spawn of the devil.

What's notable about the tilt at metal basher GKN taken by turnaround specialist Melrose, however, is how decorous it has been to date. While the two sides haven't exactly been complimentary about each other, it's also true that there haven't been any real fireworks thrown. Really, it has looked more like a high school prom invitation where one side tells the other they’re just not interested, despite the offer of a round of fizzy pop, because they can dance better alone.

Melrose chairman Christopher Miller sent a letter to GKN shareholders today alongside his offer document that continued with that theme. While it said "we can do better with this business than the current management can" it didn't do much in the way of trashing GKN and its bosses, concentrating rather on bigging up Melrose.

It was as if Mr Miller had invoked the old Right Said Fred song - I’m too sexy for my shirt, so sexy it hurts. His letter was an exercise in peacock style preening. Look at the super duper job we’ve done with all these businesses we've owned in the past, he says, and here are the case studies to prove it. They do rather underline a criticism of the bid: GKN is a lot bigger, more complicated, and more important than any of them. But we'll park that for now.

It is possible to pick a few holes in some of the things the letter says. “We’re not private equity,” Mr Miller declares, even though the model Melrose operates (buy, shake up, sell) is exactly what you might expect from a private equity outfit.

There’s also a bit on Melrose’s “philosophy” of investing in research & development: “At Elster and Nortek this has meant an R&D investment of approximately 4 per cent of sales over the last five years.”

Nortek was actually only acquired in the second half of 2016. But maybe I’m splitting hairs there.

However, what is most striking is how little there really is for GKN shareholders to get their teeth into. There's promise to “declutter” GKN, lots of talk about “long term”, some indications about the direction of travel, a pledge not to hurry over splitting the automative division from the aerospace operations that some analysts think is where the value lies. Crucially, there are no sweeteners, and it bears repeating that the bid is now worth less than when it was announced because Melrose is proposing to substantially pay with shares which have fallen in value.

But Mr Miller's communication doesn't really look as if it was aimed at investors so much as it was aimed at the wider audience of the public, regulators, unions, and especially politicians given the hot potato that the bid has become.

“Many of you may not have come across Melrose before our interest was made public,” says Mr Miller. That’s unlikely to be true of GKN’s institutional shareholders. If they weren’t aware of Melrose then they would have been doing an awful job on behalf of their clients. Some will have investments in both.

It is, however, true of politicians and the public and Mr Miller wants them to know that Melrose is run by good chaps (there’s only one woman on the board and she’s not an executive) and will be a good owner for GKN, rather than a financial engineer utilising City paper and the GKN's own balance sheet to bid for it.

He tries to soothe the very real concerns raised about GKN’s pension fund. He waves the Union flag (we are a UK premium public company listed on the London Stock Exchange, registered in Birmingham and led by a long-standing British management team) which is a popular thing to be doing in Brexitland.

Mr Miller's missive is a very smart piece of spin. But it doesn't really change very much.

GKN is a company with potential that needs a little extra oomph in the short term to realise its long term potential in both the automotive and aerospace markets.

Its new management team can provide that, while presenting shareholders with less risk. It can pay shareholders at the same time as ensuring the stability the company’s UK and US Government clients want and need. The latter will also find favour with the group's skilled workforce, which is also important to note.

Melrose's bid represents a leap into the dark. This document adds little in the way of light.