View from City Road: GKN bargains with Westland

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The Independent Online
Since GKN launched its initial cash bid for Westland in February the stock market has fallen by almost 12 per cent. It was still falling yesterday as GKN finally bowed to the inevitable and lifted its 290p offer by 15 per cent to 335p including the 5p special dividend already promised by Westland.

It was enough to shake out the less committed shareholders and give GKN control by mid-morning. Westland's two major shareholders, M & G and Schroders Investment Management, which hold 25 per cent of the company between them, stood aloof from the day's dealings.

There seems little point in their hanging out for a better offer in the future, tempting as this may be, since GKN can channel down its Advance Corporation Tax surplus towards Westland with simple majority control.

Having dismissed Westland's defence as old news, GKN has chosen to rationalise its increased offer by pretending that it did not want to be seen to be snaffling future proceeds from the company's long running legal dispute with the Arab Organisation for Industrialisation.

This was never really the key issue - rather it was the valuation of Westland's prospects.

It is a pity that the two sides could not come to an agreed deal since the original 290p offer was driven by GKN's agreement to buy United Technologies' 17 per cent stake rather than by a serious offer for the whole company.

It leaves the impression that GKN has scraped in at a bargain price and poses a large question over the position of incumbent management at Westland as it enters a new era of helicopter production with major orders for its EH 101.