GKN owner Melrose considers options after being low-balled by bids for unit

GKN owner Melrose is licking its wounds after it failed to attract the right price for one of the engineering group’s key divisions.

The company’s management is now considering its options after being low-balled by bidders, including private equity firms Apollo and PAI Partners, Sky News reported last night.

It expected to get around £2bn for GKN Powder Metallurgy, but initial bids last week valued the company at closer to £1.6bn.

“They will sell the business, but it may not be through this particular auction,” a source told Sky News.

The sale process for the business unit was launched following Melrose’s £8bn hostile takeover of GKN earlier this year.

The deal, which was approved in March, faced tough criticism and Melrose was forced to promise concessions to the government before getting the go-ahead.

Melrose, which specialises in turning around struggling businesses, said it could get better results from the UK industrials giant.

But Business Secretary Greg Clark demanded authorities would get to vet any potential bidders for the parts of GKN which affect national security, and could veto any deal.

The company was also forced to maintain GKN’s research and development budget, and not sell the aerospace unit for at least five years.