The new chief of GKN, Anne Stevens, waved a multi-billion pound cash bonanza in front of investors on Wednesday in a make-or-break bid to see off hostile bidder Melrose.
The under-fire engineer, battling to escape Melrose’s grip, has promised the bulk of a £2.5 billion windfall for shareholders within 18 months by selling its metal powders unit and a string of other businesses within its aerospace and car empire.
Higher cash payouts are also on the cards if investors side with Stevens’ new management team and turn away from Jock Miller’s squad at Melrose, which wants to buy GKN for £7.4 billion.
“I’m here to make the tough decisions,” said Stevens, (pictured) the 69-year-old former Ford executive who was parachuted into GKN last month.
“I’m not here to preserve this company’s history. I am here to deliver a great future. No more one size fits all. I’ve done a turnaround at every place I’ve ever been.”
Shares rose 0.5% higher to 400p. Melrose is offering 81p in cash and 1.49 shares, making its offer worth 399p.
The Redditch-based firm, which has 60,000 staff globally, also promised “minimal job losses” from the looming overhaul, a signal to MPs concerned by the impact of any Melrose takeover.
Under today’s plan, named Project Boost, the 260-year-old engineer plans to switch from the strategy of chasing sales to churning out more investor cash by boosting its sluggish efficiency. It will spend £450 million upgrading factories with robots and improving how it buys and sells products used to make gear for customers such as Boeing, Airbus, Mercedes and BMW.
The move, which will save £814 million over the period, will give a lasting benefit of £340 million per year in more cash for shareholders by 2020, GKN said.
The company has also set aside £70 million of incentive payments to gee up staff.
GKN has hired McKinsey partner Tom Kolaja as chief transformation officer to push through the plan. He will report to Stevens and has helped overhaul industrial companies in Poland.
Former Akzo Nobel head of strategy Jennifer Midura has also been appointed to head GKN strategy and communications.
Finance boss Jos Sclater said GKN was “investing for the future”. It plans to hand back half of the free cash it earns to shareholders, in another sop to the City, which has become disgruntled at a lack of performance.
Melrose said the plan was “long on adjectives and promises but desperately short on detail”, and promised to keep hold of powder metals for longer than GKN plans.
GKN still aims to separate aerospace and automotive.