Change is brewing at Britain's GKN, one of the industry's largest suppliers of driveline systems.
On Jan. 1, GKN board member and former Ford Motor Co. executive Anne Stevens unexpectedly was named CEO, replacing Kevin Cummings, who until then held the title of CEO designate. One week later, a takeover bid was instigated by Melrose Industries, a London conglomerate specializing in buying underperforming companies and re-establishing profits to sell them off again.
What kind of supplier now will be led by Stevens, who served as Ford's COO for the Americas, will depend on the outcome of the hostile takeover, or on what measures Stevens takes to avoid it.
On announcing Stevens as CEO, the company acknowledged that profits and cash flow had been below expectations, despite sales growth. It said GKN has embarked on a two-year campaign to improve profits by focusing attention on its three core businesses — aero engines, constant velocity joints and advanced vehicle technologies — and considering the possibility of spinning off its aerospace operations.
Last week, the company sweetened the prospect for resisting Melrose's effort by saying GKN will return $3.5 billion in cash to shareholders over the next three years, partly by selling off its powdered metallurgy business.
Adding to the drama: GKN is suddenly on a hot streak with its advanced electric driveline, or eDrive.
Analysts believe GKN made itself vulnerable when it indicated plans to spin off aerospace. But GKN argues that Melrose lacks the experience in complex technologies and long-term investments to take them on.
"Melrose is trying to buy GKN on the cheap," Stevens, 69, said in a statement, "just at the point when our company is beginning to reap the benefits of its long-term investments."