Melrose Industries, the turnaround specialist that owns British engineer GKN, will separate its GKN Automotive and GKN Powder Metallurgy divisions and list them as separately independent businesses, unraveling part of the politically controversial hostile takeover it made in 2018.
The Financial Times was the first to report late on Wednesday that Melrose plans to spin off the GKN automotive division - which supplies parts to automakers such as Volkswagen Group - and smaller powder metallurgy businesses from its aerospace arm.
The new group, to be headquartered and listed in London, will seek acquisitions in the rapidly changing car industry, Melrose said in a statement.
Melrose won control of GKN in 2018 after investors holding a majority of the UK engineering company’s stock accepted its £8.1 billion ($9.3 billion) hostile takeover offer. Before that, GKN had considered selling its powder metallurgy business as part of a broader plan to raise cash and reward shareholders as it sought to fend off Melrose’s bid.
At the time, Melrose’s takeover attracted criticism from politicians and unions concerned about buyout groups targeting British industrial assets.
Melrose will keep its aerospace unit.
Melrose said it would seek shareholder approval for the proposed demerger in the first half of 2023 and current CEO and finance director of GKN Automotive, Liam Butterworth and Roberto Fioroni, will retain these roles on the board of the demerged company.
Melrose added it will retain ownership of GKN Aerospace, a supplier of airframe structures and engine components for aerospace and defense companies including Airbus and Rolls-Royce.
Melrose said its first-half results were at the higher end of expectations due to a strong recovery in aerospace.
Half-year adjusted pretax profit came in at 128 million pounds ($147 million) compared to a profit of 114 million pounds a year ago.
Bloomberg contributed to this report