UK Tier One aircraft components supplier GKN has rejected a second takeover bid from turnaround specialist Melrose.

GKN, which is a major supplier to both Airbus and Boeing and is the world’s largest provider of aircraft transparencies, has been trying to fend off Melrose, which claims it will improve profits by cutting costs and streamlining the 259-year-old British engineering giant.

Over the weekend, GKN—which has two main divisions serving the aviation and automotive sectors—reached an agreement, subject to shareholder approval, to merge the latter with a US counterpart, Dana in a $6 billion cash and shares deal.

To sway shareholders, Melrose posted an improved offer March 12, increasing its bid to £8.1 billion ($11.3 billion) from its previous £7.4 billion, describing the latest bid as full and final. In a message to GKN shareholders, Melrose said the GKN board, in hiving off its automotive division to Dana, “is attempting a hasty fire-sale of GKN businesses before they have been given a chance to reach their potential and with damaging consequences, we believe, for all stakeholders.”

Within hours, the increased bid was rejected by GKN. In a notice to shareholders, it said that “the board continues to view the offer as entirely opportunistic and believes that its terms fundamentally undervalue GKN and its prospects.”

It added, “Since we announced our intention to separate our [aviation and automotive] businesses, we have received a number of approaches for GKN Aerospace at values significantly above what we believe is reflected in GKN’s share price today.”

GKN shareholders have until March 29 to accept or reject the Melrose offer.

Alan Dron