The week ahead: GKN vs Melrose Final Round
23rd March 2018 16:03
by Lee Wild from interactive investor
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In a four-day week lacking much by way of company results, it's the bitter squabble over control of UK engineering giant GKN that will likely take centre stage.
Monday 26 March
Trading Statements
Instem, SpaceandPeople, Satellite Solutions Worldwide, Tissue Regenix, Taptica International, Globaltrans Investment, Pennon
Tuesday 27 March
Trading Statements
James Halstead, Orchard Funding Group, Ferguson, Moss Bros, Gulf Marine Services, e-Therapeutics, Alliance Pharma, Barr (A G), Churchill China, Elecosoft, United Utilities
Wednesday 28 March
A final read on US fourth quarter GDP should show the US economy grew by 2.6% on an annualised basis, according to analysts, up from 2.5% last time.
In Jerome Powell's first meeting as Fed chair, he and fellow policymakers raised forecasts for 2018 GDP growth to 2.7% from 2.5%, and to 2.4% next year from 2.1% previously.
Trading Statements
Anglo Pacific, Inland Homes
AGM/EGM
Yolo Leisure and Technology, St Modwen Properties, Chenavari Capital Solutions
Thursday 29 March
The drawn-out takeover saga at reaches its conclusion on Thursday. Shareholders must decide whether to accept the final offer from by 1pm.
For every share they own, GKN shareholders are being offered 81p in cash, 1.69 Melrose shares and the right to keep GKN's final dividend of 6.2p. Currently, that values GKN shares at around 222p.
Big guns were wheeled out Friday in favour of Melrose. Activist investor Elliott Advisors, which has a 3.4% stake in GKN, confirmed its intent to back the bid, doubting GKN's ability to improve the aerospace business and improve group operating margins.
And Deutsche Bank's a fan of Melrose, too. "Over the next five trading days we would expect little new information, apart from a possible update on CFIUS [Committee on Foreign Investment in the United States] approval from Melrose.
"With both companies now having fully played their hands, we see the outcome as too close to call (so far c9% of institutional investors having publicly backed GKN management and c7% Melrose). Should Melrose's offer be successful we would not be surprised to see the level of acceptance only moderately above the 50% plus one share threshold."
If GKN does fend off Melrose, Deutsche sees downside for the GKN share price to about 390p, or 10% "and likely fuelled further by event funds unwinding their long positions in the name".
Trading statements
Chesnara, Akers Biosciences, Quarto Group, DX Group, RPC Group, CMC Markets
AGM/EGM
Stellar Diamonds, Adept4
Friday 30 March
Market closed for Good Friday
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