The week ahead: GKN vs Melrose Final Round

In a four-day week lacking much by way of company results, it’s the bitter squabble over control of UK engineering giant GKN that will likely take centre stage.

Monday 26 March

Trading Statements

Instem, SpaceandPeople, Satellite Solutions Worldwide, Tissue Regenix, Taptica International, Globaltrans Investment, Pennon

Tuesday 27 March

Trading Statements

James Halstead, Orchard Funding Group, Ferguson, Moss Bros, Gulf Marine Services, e-Therapeutics, Alliance Pharma, Barr (A G), Churchill China, Elecosoft, United Utilities

Wednesday 28 March

A final read on US fourth quarter GDP should show the US economy grew by 2.6% on an annualised basis, according to analysts, up from 2.5% last time.

In Jerome Powell’s first meeting as Fed chair, he and fellow policymakers raised forecasts for 2018 GDP growth to 2.7% from 2.5%, and to 2.4% next year from 2.1% previously.

Trading Statements

Anglo Pacific, Inland Homes

AGM/EGM

Yolo Leisure and Technology, St Modwen Properties, Chenavari Capital Solutions

Thursday 29 March

The drawn-out takeover saga at GKN (GKN) reaches its conclusion on Thursday. Shareholders must decide whether to accept the final offer from Melrose Industries (MRO) by 1pm.

For every share they own, GKN shareholders are being offered 81p in cash, 1.69 Melrose shares and the right to keep GKN’s final dividend of 6.2p. Currently, that values GKN shares at around 222p.

Big guns were wheeled out Friday in favour of Melrose. Activist investor Elliott Advisors, which has a 3.4% stake in GKN, confirmed its intent to back the bid, doubting GKN’s ability to improve the aerospace business and improve group operating margins.

And Deutsche Bank’s a fan of Melrose, too. “Over the next five trading days we would expect little new information, apart from a possible update on CFIUS [Committee on Foreign Investment in the United States] approval from Melrose.

“With both companies now having fully played their hands, we see the outcome as too close to call (so far c9% of institutional investors having publicly backed GKN management and c7% Melrose). Should Melrose’s offer be successful we would not be surprised to see the level of acceptance only moderately above the 50% plus one share threshold.”

If GKN does fend off Melrose, Deutsche sees downside for the GKN share price to about 390p, or 10% “and likely fuelled further by event funds unwinding their long positions in the name”.

Trading statements

Chesnara, Akers Biosciences, Quarto Group, DX Group, RPC Group, CMC Markets

AGM/EGM

Stellar Diamonds, Adept4

Friday 30 March

Market closed for Good Friday

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Source.