GKN PLC Share News (GKN)

LONDON (Alliance News) - GKN PLC, which is the target of a hostile GBP7 billion bid from turnaround specialist Melrose Industries PLC, said Thursday its 'Project Boost' restructuring program is expected to deliver GBP153 million of recurring annual cash benefit from the end of 2020 for the core Driveline business.

The aerospace and automotive engineering firm said savings are expected to be realised through improvement in manufacturing and functions, with direct and in-direct cost savings. Manufacturing improvements are expected to save GBP55 million, functional improvements to save GBP30 million, and direct and in-direct cost cutting to lead to GBP68 million in savings.

GKN also reiterated that core Driveline product segments are targeting a management trading margin of around 9.5% by the end of 2020.

"Our Driveline business is perfectly positioned to take advantage of the changing automotive market. We will continue to develop and deliver the technologies that will enable our customers to succeed while realising the full value of our business," said GKN Chief Executive Anne Stevens.

In January, Melrose made an increasingly hostile GBP7 billion bid for the FTSE 100-listed GKN. Since then, GKN's board has repeatedly called on shareholders to reject the offer and characterising it as "low price and high risk".

Shortly after the approach, GKN announced its "Project Boost" in order to persuade investors to reject Melrose's advances. Under the plan, GKN said it intends to return up to GBP2.5 billion to shareholders over the next three years. The engineering firm said a "significant" part of this will come from divestments over the first 12 to 18 months of the plan.

GKN intends to separate its aerospace and automotive businesses. Late in February, it said it will do this through a demerger or GKN Driveline and GKN Aerospace, to be completed by the middle of 2019. Since then GKN has received a "number of approaches" with respect to its businesses, it said.

Shares in GKN were trading 0.3% higher at 421.60 pence in early trade. Melrose shares were up 0.6% at 216.30p.