GKN bid too low, claims Westland

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The Independent Online
WESTLAND yesterday fired its first full salvo against GKN's hostile pounds 496m takeover bid, describing it as inadequate in price and lacking in industrial logic, writes Michael Harrison.

In its formal defence document, the West Country helicopter maker urges shareholders to reject GKN's 290p- a-share offer and stick with a management that has more than doubled Westland's order book to pounds 1.4bn, increased productivity 53 per cent and raised pre-tax profits 60 per cent in the past four years.

Alan Jones, Westland's chairman, said: 'GKN's offers have been launched at the low point in the helicopter delivery cycle and fail totally to recognise the value of our existing order book or our prospects.'

The document says GKN's offer values Westland at a 37 per cent discount to the average for UK aerospace manufacturers - implying that a more appropriate price might be around pounds 680m.

For the first time Westland has also spelt out its detailed projections for helicopter deliveries. With production of the naval version of the EH101 starting in 1995 and the civil variant expected to follow two years later, Westland forecasts that the value of total deliveries could rise 14-fold to pounds 360m a year by 2000.

Westland also argues that apart from offering no premium for control, the GKN bid would deny shareholders the benefit of the first pounds 99m in its pounds 385m claim against the Arab Organisation for Industrialisation, over a failed helicopter deal in the 1980s.

Westland shares closed at 329.5p, down 1.5p on the day but 39.5p above GKN's offer price.

City Road, page 32

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