FTSE 100: 7788.44 ▼ -89.01 (-1.13%)
A surge in the shares of GKN has helped drive the FTSE 100 to a new all-time high afer the troubled engineering group rejected a takeover approach from rival Melrose.
GKN (GKN) shares jumped 26.3% to 420.1p after the group rejected a 405p per share approach from Melrose, instead setting out plans to split its business in two to unlock value for shareholders.
That helped the FTSE 100 rise 14 points to 7,778, up from yesterday's record closing high of 7,762.
GKN said the offer, comprising 81p in cash per share and the rest in Melrose shares was 'entirely opportunistic' and that the terms 'fundametally undervalue the company and its prospects'.
The engineering group also announced the appointment of interim boss Anne Stevens as the group's permanent chief executive. GKN had been looking for a new chief after Kevin Cummings, who had been due to take on the role, was dismissed following October profit warning sparked by problems in its aerospace division.
Stevens will oversee the separation of GKN's aerospace and automotive divisions, with the group having concluded 'shareholder value will be maximised by setting distinct strategic, operational and financial objectives for the businesses'.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said GKN had 'made up for years of lumbering progress in a flash'.
'The separation of the automotive and aerospace units has been on the cards for years, with little obvious cross over between the two businesses,' he said.
'Historically, the pension deficit has held the group together, but with the sprawling footprint likely to have contributed to recent profit warnings, the reasons for divorce now seem to outweigh the costs of splitting.'
The news also sent shares in Melrose (MRON) 6.9% higher to 229.5p