Stung into action by a £7.4 billion hostile takeover bid from Melrose this week, GKN's management has come out fighting, with a robust attack on Melrose's offer and critique of what 'synergies' the latter is claiming to offer.

GKN slated Melrose for offering a "fake premium" and rubbished claims made by Melrose that GKN's pension liabilities and transformation plans were inaccurate and misleading.

Anne Stevens, GKN’s new permanent chief executive, said it was "debunking some of Melrose's inaccurate assertions".

She laid into the premium Melrose reckons its offer amounts to.

Melrose claims its cash-and-share offer values GKN shares at 430.1p, 32 per cent premium, but GKN said this was "misleading", with the real premium actually one third of amount, at 11 per cent.

That's because, while the Melrose takeover would mean GKN shareholders received an 81p-a-share cash payout and 57 per cent ownership of the combined business, the deal would leverage the firm's balance sheet to finance the payout, costing £1.4 billion.

In other words, GKN thinks its own "shareholders are themselves funding the majority of this premium".

GKN management also doubted whether Melrose could do with GKN what it did with earlier takeovers that were "substantially smaller, and supplying vastly different customer types".

It noted that "GKN is five times bigger than anything Melrose has taken on before", adding that the latter "has very limited experience at board level of managing tier 1 aerospace and automotive suppliers".

Analysts were reported as welcoming GKN's attack but said much more was needed if the firm was either to rebuff the takeover or force Melrose to up its offer.

In a sign the takeover battle was hotting up, Melrose responded by claiming its takeover bid had added "104p per share, or £1.8 billion, added to the value of GKN which shareholders can, if they wish, realise today in the market. Melrose's actions have done that, not GKN's management".

It added that "Melrose believes the shareholders of GKN are best placed to judge which management team is better equipped to deliver the greatest value to shareholders of GKN".

If GKN needs further ammunition in the fight, it might look at comments of the highly respected industrial analyst and former Birmingham Post columnist Howard Wheeldon who has analysed Melrose's track record.

In one of his regular in-depth commentaries, he highlighted Melrose's inability to turn around the engineering firm Brush after its takeover in 2008 of FKI (in so doing acquiring the firms Brush, Bridon, Crosby, Truth, Harris and Acco).

He notes (reproduced with permission):

“My understanding is that Melrose strategy aims to own businesses that it acquires for between three and five years. During that time it aims to turn round what it believes are underperforming manufacturing assets and sell them on. To that end, the majority of subsidiaries acquired with FKI in 2008 for instance have already been sold. However, almost ten years on Brush remains part of Melrose and I doubt very much that the reason is because they like the name.

“I guess that Brush remains part of Melrose… today not because it is an intrinsic part of the strategy but because they are stuck with it as it struggles with low sales activity due to the low oil price and no doubt, intense global competition. In order to better demonstrate the seriousness of the current situation and show just how bad the market currently is, Brush has said that it expects to sell just 80 of its big £2 million generators in 2017 compared to the 208 that it sold in 2012. Not much that Melrose can do about that save sit on its hands and wait.

“The point behind this is that not all companies acquired by buy-to-sell mini conglomerates like Melrose are that easy to turn around. GKN is a very big fish in a very big market and while it has itself stumbled as a result of unexpected issues that have occurred in its US operations, it is a very well-managed company producing half decent margins in the majority of its operations. In other words, despite its current difficulties it is not a turnaround situation.

“The investment community has wanted to see GKN broken up for years just as it has welcomed and indeed, prospered from bids and break-ups of many once great UK based engineering companies such as Hawker Siddeley, Joseph Lucas and TI Group. Such things would never be allowed to occur in Germany and France but here in the UK, investors care less about the long term future and whether there will be any engineering and manufacturing companies left to invest in.

“And where are all those once great companies now? Mostly they have gone to that great graveyard of former British engineering companies in the sky for whom the sum of the parts was deemed by investors to be worth more than the whole! Are we ready to see yet another fine British company in the form of GKN that has a fantastic history of achievement and a collection of hugely important global automotive, aerospace, powder metallurgy and additives businesses potentially disappear without trace for the benefit of a few Vultures?”

Spot on, Mr Wheeldon.

Let's be clear. A Melrose takeover of GKN would most likely see the firm broken up and various units sold off to different buyers over time.

That, in turn, will place a question mark over retaining operations like GKN Driveline in the UK. This would be damaging to the industrial base in the UK.

One area where I do question GKN management is on its plan to split the firm up.

GKN management has claimed that it is not aiming for a "hasty break-up", instead saying splitting GKN up into its core aerospace and automotive units would "be determined by the need to maximise the economic benefits and minimise the costs associated with separation".

I'm not so sure about that. The former chief executive Nigel Stein had - rightly in my view - resisted splitting up the firm as he felt the expanding aerospace business provided a degree of security against the typically cyclical nature of the auto side of the business.

I would add to that justification the increasing overlap of aerospace and automotive technologies and the fact a bigger business is better able to resist takeovers.

Witness what happened to Cadbury after it separated from Schweppes.

As I have said before, GKN is a fundamentally well-run company and there is no need to change the management of the firm through a disruptive takeover or even, I'd argue, split it up.

I’d doubt very much whether this would be happening in France or Germany.

Professor David Bailey works at the Aston Business School.