The day ahead includes the outcome of Melrose’s hostile takeover bid for GKN and trading updates from SSE and RPC
Thursday is D-Day for GKN PLC (LON:GKN) shareholders to vote on a £8bn hostile takeover bid for the engineer from turnaround specialist Melrose Industries (LON:MRO).
The takeover battle has intensified in recent days with the two companies logging statements at each other.
In a Wednesday statement from Melrose, it warned GKN investors that the engineer’s shares could drop if they vote against the bid.
The company said GKN’s valuation has risen by £1.8bn since it first approached the company in January.
“Where would GKN’s share price have been without Melrose’s approach and where would it fall to if Melrose’s offer did not proceed?,” it asked.
Melrose also sought to alleviate concerns raised by business secretary Greg Clark over the deal by saying it would not embark on a reorganisation of GKN.
Clark was worried that Melrose’s business model has been “built on short-term ownership” while GKN needs long-term investment to support the engineer’s work in UK defence.
Melrose outlined a five-year “legally binding” commitment to keep its headquarters and listing in the UK, ensure a majority of its directors are resident in the UK and maintain GKN’s research and development spending at 2.2% of sales.
GKN said the fact that the business secretary had to step in, was “further evidence that Melrose is the wrong owner for this business and that shareholders would be taking a risk in accepting this offer”.
GKN’s plan is to sell its automotive business, Driveline, to Dana Inc (NYSE:DAN) and offload non-core units to become a standalone aerospace company.
Shareholders have until lunchtime on Thursday to vote either way.
SSE’s Npower deal eyed
SSE plc’s (LON:SSE) planned merger with Npower and its response to a regulatory clampdown on utilities will be in focus when it reports a pre-close trading update on Thursday.
The company has been in talks with the Competition and Markets Authority on its proposed deal to merge its UK energy supply business with that of Npower.
Investors are likely to concentrate on any remarks about the deal in the trading statement.
Any remarks on its plans to tackle upcoming price restrictions on utilities by regulator Ofwat will also be closely eyed.
Ofwat’s PR19 methodology controls the prices utilities can charge customers from 2020.
Sector peers Pennon Group plc (LON:PNN) and United Utilities PLC (LON:UU.) updated the market on their response to the price review in trading updates this week.
RPC faces hit from calls to cut plastic
Packing company RPC Group PLC’s (LON:RPC) fourth quarter update is likely to attract more attention than usual given the recent media coverage on the impact of plastic waste on the environment.
The last update from the FTSE 250-listed company in February showed organic revenue growth of 4% in the third quarter and RPC said then that profits had grown in line with expectations.
However, with demand for plastic packaging likely to fall, organic revenue growth of over 3% in the final quarter of the year would be respectable, and if it can repeat the 4% that would be a good result.
RPC prides itself on its innovation and given the increased complexity of fully recyclable products that could work in its favour, the group has also been investigating bio-polymers and compostable materials.
Thursday March 29:
Acceptances close for Melrose’s bid for GKN
Trading updates: RPC Group, PLC (LON:RPC), SSE plc (LON:SSE), CMC Markets Plc (LON:CMC)
Finals: Chesnara Plc (LON:CSN), Eddie Stobart Logistics PLC (LON:ESL), GAN PLC (LON:GAN), Wentworth Resources PLC (LON:WRL)
Interims: DX Group PLC (LON:DX.), Quarto Group PLC (LON:QRT)
Ex-dividends: To knock 3.9 points off FTSE 100 – British Land Company PLC (LON:BLND), InterContinental Hotels Group PLC (LON:IHG), Prudential PLC (LON:PRU),
Economic data: Nationwide UK house prices; UK GDP; UK consumer credit; US weekly jobless claims, US personal income, consumption, US Chicago PMI, US consumer sentiment