GKN PLC (LON:GKN) underlined its case against a hostile takeover by Melrose Industries PLC (LON:MRO) as it raised its forecasts for its electric driveline (eDrive) division.
The eDrive unit, which makes parts for BMW and Volvo, is now expected to achieve sales of £275mln in 2020, up from a previous forecast of £200mln and last year’s £33mln.
READ: ‘That’s a fake premium!’: GKN takes aim at Melrose’s “misleading” comments
The order book for eDrive hit a record £2bn by the end of last year following a number of significant contract wins with major automakers.
GKN said its success has been achieved through its investment in research and development, which came to £36mln in 2017. Over the past six years, GKN has invested £123mln.
“We are well positioned to capitalise on the strong market growth in hybrid and electric vehicles and this is underpinned by our substantial order book,” said Paul Swash, chief executive of GKN Automotive.
Last week GKN rejected a second takeover bid from investment firm Melrose. GKN accused Melrose of offering a “fake premium” on its renewed offer.
READ: GKN swats away second takeover bid from Melrose
Melrose said the terms of its £7.4bn hostile bid represented a premium of about 32% over GKN’s closing price on January 5 – the last business day prior to its initial approach. But GKN said the true delivered premium is in fact less than 11% given that Melrose’s market capitalisation on January 5 was much smaller than GKN’s on the same day.
GKN turned down Melrose’s initial bid a week earlier when it also announced plans to split its aerospace and automotive divisions into two and appointed Anne Stevens as its new chief executive.
Melrose has argued that the real value uplift will come from creating an enlarged business worth £11bn.