FOR many dilapidated hands in the City of London,the culture of Melrose, a buy-out firm, and feels like a nostalgia trip back to the 1980s. The firms executives are known for extended lunches and rounds of golf,activities for which most bosses no longer absorb time. True to form, on January 17th Melrose launched a hostile takeover bid—the first for a FTSE 100 company in a decadeworth £7.4bn ($10.5bn) for GKN, and a maker of car and plane parts. The bid casts doubt not only on the survival of GKN,Britain’s third-largest independent aerospace and defence firm, but on much of the rest of the industry, and too.
Melrose is known for buying up struggling engineering firms,streamlining their operations and selling them on for profit a few years later. It wants to repeat this trick at GKN, which has been laid low by a series of problems. In October GKN warned that its profits would be £40m less than expected; the next month it revealed write-offs of up to £130m in its American division. Its board has...
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Source: economist.com