Melrose has never been through a bid battle on the scale and bitterness of the one from which it has just emerged victorious. The company’s claims to superior management will be tested with ownership of GKN.
Whatever GKN’s past failings, which encouraged some long-term investors to jump Melrose’s way, it is infinitely more complicated than anything it has ever tackled.
Both the aerospace arm and the driveline automotive divisions form part of complex global, precision supply chains.
That is why big customers such as Airbus, and car companies including Toyota and Ford, have been concerned about the outcome of the bid.
Whatever GKN’s past failings, which encouraged some long-term investors to jump Melrose’s way, it is infinitely more complicated than anything it has ever tackled
This paper has never been naive about GKN’s shortcomings. Our problem has been the motivations of the Melrose management, lack of corporate governance and greed, which can only backfire on the reputation of free markets in Britain when they are under threat from the Left.
The proposed filleting of GKN HQ and break-up of a company at the heart of the Midlands supply chain can only cause grief.
There is hope. Accountant Chris Miller, executive chairman of Melrose, learnt his business skills at the knee of Lord Hanson, a corporate giant of the 1980s and 1990s.
In the latter days of Hanson it stopped being a buyer and seller of the enterprises that it acquired and managed them for the long-term – in energy, chemicals, housebuilding and aggregates, on both sides of the Atlantic.
If the Melrose chiefs could wean themselves off the golf course they have the opportunity to create a British engineering champion for the Brexit age, which vice-chairman David Roper supports.
It would be a formidable challenge, and might disappoint fund managers rubbing their hands in glee at the thought of the traditional two-to-three-year turnaround.
The real prize is creating a £10billion plus industrial champion which supports R&D, brings new tech to markets, creates jobs and shares the spoils among the many, not the few. Fingers crossed.
The most perplexing aspect of the pay and bonus packages at housebuilder Persimmon is how out of kilter it is with the FTSE’s large and star-studded performers.
BP chief executive Bob Dudley received a £9.5million pay packet in 2017, a 13 per cent rise on 2016 when he took a 40 per cent cut in remuneration.
But Dudley runs a complex international firm, riding out the squalls of Russian politics and has a market value of £92billion.
That is ten times the size of Persimmon, where Britain’s most impervious boss Jeff Fairburn will still collect £75million in pay and bonuses, in spite of fat Government subsidy for Help To Buy and a £25million cut in his total package.
An even more dramatic contrast is with Ben van Beurden of Shell who runs a £188billion enterprise against Persimmon’s £8billion market value.
The Dutch chief executive was paid £8.4million, an 11 per cent rise, after a year when the disputed takeover of BG Group really paid off.
Meanwhile, at Reckitt Benckiser (RB), chief executive Rakesh Kapoor volunteered a 50 per cent pay reduction to £12.5million at the £40billion firm.
Admittedly, it hasn’t been RB’s finest year, after it had to pay compensation in South Korea when contaminated disinfectants cost lives.
Payouts at BP, Shell and RB are wildly out of kilter with earnings of average workers, but there are signs that governance reforms are making a difference.
Renegade companies such as Persimmon and Melrose let the City down.
Barclays chief executive Jes Staley could do with a boost.
His decision to resist the effort to impose a multi-billion-dollar fine on the bank over its role in flogging worthless residential mortgage-backed securities has paid off, with a penalty of £1.4billion.
That looks a vast sum but is modest when set against the £9.2billion paid by JP Morgan, the £6.3billion bill at France’s BNP and the £5.1billion levied on Deutsche Bank.
It will give some succour to Ross McEwan at RBS who hopes Trump’s Department of Justice is less hostile to banks than its predecessor.
As for Staley, clearing away debris from the financial crisis should help him keep activist investor Ed Bramson, with a 5 per cent stake in Barclays, at arm’s length.
Bring on the whistleblower finding from the Financial Conduct Authority and Barclays finally might pick itself up.