Contested bid for GKN plc
Agency: Montfort Communications
When Melrose Industries decided it would bid for FTSE 100 engineering giant GKN in January 2018, it brought long-standing PR advisers Montfort Communications into the fold in late December.
But when GKN made the surprise decision to make the approach public four days after it had been made, it meant that Montfort had less than two weeks to digest the ramifications of the deal and develop an appropriate communications strategy before it had to engage with journalists.
Montfort correctly anticipated that GKN, a 250-year-old business employing 60,000 people worldwide, would characterise Melrose, a 15-year-old company listed on the FTSE 250, as an upstart, too inexperienced and ill-equipped to run a global business. Its strategy was to counter that GKN was a poorly performing, badly managed business that had failed to deliver shareholder value.
The approach appeared successful, with the majority of media and analyst coverage in favour of Melrose. But Montfort then reasoned that GKN would toss more brickbats at Melrose. Its role was to be unwavering in its defence but also unstinting in its criticism of GKN’s management and performance.
It also had to counter accusations that Melrose was an opportunistic asset stripper by demonstrating its track record, and highlighting that it invested in the businesses it had acquired and achieved results by underlying operational improvements rather than financial chicanery. Melrose had also proved to be mindful of pension rights for employees in those businesses - a factor that resonated with politicians.
Montfort stuck to its initial strategy throughout the three month battle, even as GKN adapted its defence strategy. Takeover Panel rules restricted Montfort from responding to politicians and unions as they expressed their views and concerns on social media, which meant that traditional media channels - such as the key business pages - became even more important.
It had to work behind the scenes to counter a campaign by the Daily Mail to have the deal blocked on national security grounds, holding discussions with ministers and civil servants and briefing leader writers, specialist reporters and City editors.
When GKN’s biggest client, Airbus, and major investor Columbia Threadneedle publicly voiced their concerns about the deal, it did not respond but instead stuck to the key message it has crafted at the outset: which was the management team with the track record?
On 29 March, GKN shareholders approved the takeover of the business by Melrose Industries. ‘This was a heavyweight campaign that won the bid,’ said the judges. ‘A clear strategy that is a case study in how to conduct a hostile takeover.’