REG - Melrose Industries GKN PLC - Firm Offer for GKN plc <Origin Href="QuoteRef">GKN.L</Origin> <Origin Href="QuoteRef">MRON.L</Origin> - Part 2

Melrose IndustriesAnnouncement

17/01/2018 08:05

- Part 2: For the preceding part double click  ID:nRSQ0978Ca 

arrangers and bookrunners (the "Arrangers") and
Lloyds Bank plc as agent (the "Agent") (the "Facilities Agreement"). 
 
The Facilities Agreement provides for term facilities and revolving facilities
in an aggregate principal amount of up to £2,600,000,000, $2,000,000,000 and
E500,000,000, under which certain members of the Melrose Group may borrow upon
the satisfaction of certain conditions (the "Facilities").  The proceeds of
borrowings under the Facilities may be used to finance the cash consideration
that may become payable to GKN Shareholders pursuant to the transaction, to
refinance existing indebtedness of the Melrose Group and the GKN Group, to pay
fees and expenses relating to the transaction and any refinancing and for
general corporate purposes.  Such loans under the Facilities will be available
on a customary "certain funds" basis. 
 
Interest Rates and Maturity 
 
Loans under the Facilities will bear interest at a rate of LIBOR or EURIBOR,
as appropriate, plus a margin ranging from 0.75% to 2.25%.  The margin for
each loan will be subject to adjustment based on group leverage.  The maturity
of the Facilities ranges from, in respect of the term facility, the earlier of
(i) 3 years and 6 months after the date of the Facilities Agreement and (ii) 3
years after closing and, in respect of the revolving facilities, 5 years after
the date of the Facilities Agreement. 
 
Prepayments 
 
The Facilities may be voluntarily prepaid or cancelled by the Melrose Group
without penalty or premium.  The Facilities Agreement permits each lender to
require the mandatory prepayment of all amounts owing to that lender upon a
change of control of Melrose. 
 
Guarantees 
 
Loans under the Facilities Agreement will be guaranteed on a senior basis by
Melrose and certain of its subsidiaries.  In addition, it is a requirement
under the Facilities Agreement that certain material members of the GKN Group
provide guarantees in favour of the Lenders following completion of the
transaction, subject to certain limitations (including in respect of financial
assistance laws).  The Facilities will be unsecured. 
 
Certain Covenants and Events of Default 
 
The Facilities Agreement contains certain operating covenants which will
restrict the ability of the Melrose Group and the GKN Group to, among other
things: 
 
·     create security over assets; 
 
·     sell or transfer assets; 
 
·     make acquisitions; 
 
·     make loans; 
 
·     give guarantees; 
 
·     merge or consolidate; and 
 
·     incur additional indebtedness. 
 
The Facilities Agreement contains financial covenants requiring Melrose to
ensure that interest cover shall be at least 4.00:1.0 and that group leverage
shall be no greater than 3.50:1.0.  The Facilities Agreement also contains
certain customary representations and warranties, affirmative covenants and
events of default. 
 
Under the terms of the Facilities Agreement, Melrose has agreed that it will
not amend or waive any Condition without the consent of the lenders if to do
so would be materially prejudicial to the interests of the lenders under the
Facilities Agreement, save as required by the UK Listing Authority, the London
Stock Exchange, the Panel or the Court.  Without the consent of the lenders,
Melrose may reduce the minimum threshold for acceptances in Condition (a) to
not less than 50% of the ordinary shares in the capital of GKN plus one
share. 
 
Rothschild and RBC Europe Limited are satisfied that sufficient resources are
available to Melrose to satisfy in full the cash consideration that may become
payable to GKN Shareholders pursuant to the Acquisition. 
 
13.        RESTRICTED JURISDICTIONS 
 
The availability of the Acquisition to GKN Shareholders who are not resident
in the United Kingdom may be affected by the laws of the relevant jurisdiction
in which they are located.  Persons who are not resident in the United Kingdom
should inform themselves of, and observe any applicable legal or regulatory
requirements. 
 
This Announcement does not constitute an offer for sale of any securities or
an offer or an invitation to purchase any securities. GKN Shareholders are
advised to read carefully the the Offer Document, the Melrose Prospectus and
the Form of Acceptance, once these have been published and dispatched. 
 
Please refer to the overseas jurisdiction section of Section 17 of this
Announcement. 
 
14.        Documents on website 
 
Copies of the following documents will, by no later than 12 noon (London time)
on 18 January 2018, be published on www.melroseplc.net: 
 
(a)        this Announcement; and 
 
(b)        the various financing documentation entered into in connection with
the financing of the Acquisition and the Enlarged Group following completion
of the Acquisition as referred to in Section 12 above. 
 
15.        mix and match facility 
 
Eligible GKN Shareholders will be entitled to elect, subject to offsetting
elections, to vary the proportions in which they receive New Melrose Shares
and cash in respect of their GKN Shares.  However, the total number of New
Melrose Shares to be issued and the maximum aggregate amount of cash to be
paid under the Acquisition will not be varied as a result of elections made
under the Mix and Match Facility. 
 
Satisfaction of elections made by Eligible GKN Shareholders under the Mix and
Match Facility will therefore depend on the extent to which other GKN
Shareholders make offsetting elections.  To the extent that elections cannot
be satisfied in full, they will be scaled down on a pro-rata basis.  As a
result, GKN Shareholders who make an election under the Mix and Match Facility
will not necessarily know the exact number of New Melrose Shares or the amount
of cash they will receive until settlement of the consideration due to them
under the Acquisition. 
 
The Mix and Match Facility will not affect the entitlement of any GKN
Shareholder who does not make an election under the Mix and Match Facility. 
 
Further details in relation to the Mix and Match Facility (including the
action to take in order to make a valid election, the deadline for making
elections, and the basis on which entitlement to receive cash may be exchanged
for an entitlement to additional New Melrose Shares) for GKN Shareholders will
be contained in the Offer Document. 
 
16.        CONDITIONS AND TIMETABLE 
 
The Acquisition is conditional upon, amongst other things, approvals or
confirmation of non-applicability from (i) CFIUS and other US defence and
federal agencies, (ii) the BMWi and (iii) the French Ministry of Economy
((i)-(iii) together, the "Defence Conditions"). 
 
Appendix 1 to this Announcement sets out the Conditions (including the Defence
Conditions) and further terms to which the Acquisition will be subject. Under
Rule 31.7 of the City Code, except with the consent of the Panel, all the
Conditions must be satisfied or the Acquisition will lapse within 21 days of
the first closing date or the date the Acquisition becomes or is declared
unconditional as to acceptances, whichever is the later. Rule 31.7 also
provides that the Panel's consent to an extension will normally only be
granted, broadly, if the outstanding condition involves a material official
authorisation or regulatory clearance relating to the transaction. 
 
The timetable for obtaining the consent of the relevant agencies pursuant to
the Defence Conditions is controlled by such agencies and depends, in part,
upon the engagement of GKN. This timetable differs from, and can be longer
than, the conventional timetable for an offer under the City Code. 
 
In the case of CFIUS, it is expected that it will take approximately 75 days
from the date on which CFIUS accepts the notification and commences the formal
review. With regard to the German Defence Condition, Melrose intends to seek
confirmation from the BMWi that no filing will be triggered. If determined
that a filing is required, the maximum time for approval is three months from
the date of such filing (subject to possible extension in the event that
further information is required). For France, Melrose intends to seek
confirmation from the French Ministry of Economy that the Acquisition is not
within scope of the relevant foreign investment rules. To do so, Melrose
intends to make a formal application, following which the usual timing for
approval is up to two months (subject to possible extension in the event that
further information is required). 
 
The making of the filings described above depends upon the engagement of GKN
with both the relevant authorities and with Melrose. In the event that the
Defence Conditions are not satisfied within 21 days of the first closing date
or the date the Acquisition becomes or is declared unconditional as to
acceptances, whichever is the later, the Panel has informed Melrose on an ex
parte basis that it would permit the extension of the 21 day period referred
to above in Rule 31.7 of the City Code to provide further time for any
outstanding Defence Conditions to be satisfied. 
 
GKN Shareholders who have accepted the Acquisition will not be able to
withdraw their acceptances from the date on which the Acquisition becomes or
is declared unconditional as to acceptances until the date on which the
Acquisition becomes or is declared unconditional in all respects or lapses.
Accordingly, if the 21 day period in Rule 31.7 is extended by the Panel in the
manner described above, GKN Shareholders will not be able to withdraw
acceptances for the duration of this extended period. 
 
If the Acquisition becomes or is declared unconditional as to acceptances and,
subsequently, becomes or is declared unconditional in all respects, Melrose
has agreed to keep the Acquisition open for acceptances for at least 14 days
following the date on which the Acquisition becomes or is declared
unconditional in all respects. 
 
17.        General 
 
It is intended that the Acquisition will be implemented by way of a takeover
offer within the meaning of the Act. However, Melrose reserves the right to
elect, with the consent of the Panel (where necessary), to implement the
Acquisition by way of a Court-sanctioned scheme of arrangement in accordance
with Part 26 of the Act. 
 
In such event, the transaction would be implemented on the same terms subject
to appropriate amendments, in particular to the amendments referred to in Part
C of Appendix 1 to this Announcement. 
 
The full terms of the Acquisition will be set out in the Offer Document and
the Form of Acceptance. Relevant documentation is expected to be sent (or made
available) to Eligible GKN Shareholders and, for information purposes, to
persons with information rights and to participants in the GKN Share Schemes
in due course. In deciding whether or not to accept the Offer in respect of
their GKN Shares, GKN Shareholders should consider the information contained
in, and the procedures described in, such documentation.  It is also expected
that the Melrose Circular, containing details of the Acquisition and notice of
the Melrose General Meeting, will be posted to Melrose Shareholders at the
same time as the Offer Document is posted to GKN Shareholders. 
 
Important notices relating to financial advisers 
 
Rothschild, which is authorised and regulated by the FCA in the UK, is acting
exclusively for Melrose and no one else in connection with the Acquisition and
will not be responsible to anyone other than Melrose for providing the
protections afforded to its clients or for providing advice in relation to the
Acquisition or any other matters referred to in this Announcement. 
 
Investec Bank plc, which is authorised by the PRA and regulated by the FCA and
the PRA in the UK, is acting exclusively for Melrose and no one else in
connection with the Acquisition and will not be responsible to anyone other
than Melrose for providing the protections afforded to its clients or for
providing advice in relation to the Acquisition or any other matters referred
to in this Announcement. 
 
RBC Europe Limited, which is authorised by the PRA and regulated by the FCA
and the PRA in the UK, is acting exclusively for Melrose and no one else in
connection with the Acquisition and will not be responsible to anyone other
than Melrose for providing the protections afforded to its clients or for
providing advice in relation to the Acquisition or any other matters referred
to in this Announcement. 
 
Further information 
 
This Announcement is not intended to and does not constitute or form part of
any offer to sell or subscribe for or any invitation to purchase or subscribe
for any securities or the solicitation of any vote or approval in any
jurisdiction pursuant to the Acquisition or otherwise nor shall there be any
sale, issuance or transfer of securities of Melrose pursuant to the
Acquisition in any jurisdiction in contravention of applicable laws. The
Acquisition will be implemented solely pursuant to the terms of the Offer
Document and the accompanying Form of Acceptance which will contain the full
terms and conditions of the Acquisition, including details of how to accept
the Offer. Any decision in respect of, or other response to, the Acquisition
should be made only on the basis of the information contained in the Offer
Document, the Melrose Prospectus and the Form of Acceptance. 
 
This Announcement does not constitute a prospectus or prospectus equivalent
document. 
 
Melrose will publish the Melrose Prospectus containing information on the New
Melrose Shares and the Enlarged Group as well as the Offer Document. Melrose
urges GKN Shareholders to read the the Offer Document, the Melrose Prospectus
and the Form of Acceptance carefully when they become available because they
will contain important information in relation to the Acquisition, the New
Melrose Shares and the Enlarged Group.  Any decision by GKN Shareholders in
respect of the Acquisition should be made only on the basis of the information
contained in the Offer Document, the Melrose Prospectus and the Form of
Acceptance. 
 
Information relating to GKN Shareholders 
 
Please be aware that addresses, electronic addresses and certain other
information provided by GKN Shareholders, persons with information rights and
other relevant persons for the receipt of communications from GKN may be
provided to Melrose during the Offer Period as required under Section 4 of
Appendix 4 of the City Code. 
 
Overseas jurisdictions 
 
The release, publication or distribution of this Announcement in jurisdictions
other than the United Kingdom may be restricted by law and therefore any
persons who are subject to the laws of any jurisdiction other than the United
Kingdom should inform themselves about, and observe any applicable
requirements. In particular, the ability of persons who are not resident in
the United Kingdom to accept the Acquisition or to execute and deliver the
Form of Acceptance may be affected by the laws of the relevant jurisdictions
in which they are located. 
 
This Announcement has been prepared for the purpose of complying with English
law and the City Code and the information disclosed may not be the same as
that which would have been disclosed if this Announcement had been prepared in
accordance with the laws of jurisdictions outside the United Kingdom. 
 
Unless otherwise determined by Melrose or required by the City Code, and
permitted by applicable law and regulation, the Acquisition will not be made
available, directly or indirectly, in, into or from a Restricted Jurisdiction
or any other jurisdiction where to do so would violate the laws in that
jurisdiction and no person may accept the Acquisition by any use, means or
instrumentality (including, but not limited to, facsimile, e-mail or other
electronic transmission, telex or telephone) of interstate or foreign commerce
of, or of any facility of a national, state or other securities exchange of
any Restricted Jurisdiction including the United States or any other
jurisdiction where to do so would constitute a violation of the laws of that
jurisdiction and the Acquisition may not be capable of acceptance by any such
use, means, instrumentality or facilities. Accordingly, copies of this
Announcement and any formal documentation relating to the Acquisition are not
being, and must not be, directly or indirectly, mailed or otherwise forwarded,
distributed or sent in or into or from any Restricted Jurisdiction or any
other jurisdiction where to do so would constitute a violation of the laws of
that jurisdiction and persons receiving such documents (including custodians,
nominees and trustees) must not mail or otherwise forward, distribute or send
them in or into or from any Restricted Jurisdiction or any other jurisdiction
where to do so would constitute a violation of the laws of that jurisdiction. 
 
The availability of the Acquisition to GKN Shareholders who are not resident
in the United Kingdom may be affected by the laws of the relevant
jurisdictions in which they are resident. Persons who are not resident in the
United Kingdom should inform themselves of, and observe, any applicable legal
or regulatory requirements. 
 
Further details in relation to GKN Shareholders in overseas jurisdictions will
be contained in the Offer Document. 
 
Additional US information 
 
This Announcement is not intended to, and does not, constitute or form part of
any offer or invitation to purchase, otherwise acquire, subscribe for, sell or
otherwise dispose of, any securities or the solicitation of any vote or
approval in any jurisdiction pursuant to the Offer or otherwise. The Offer
will be made solely through the Offer Document or, if Melrose elects to switch
to a Scheme, the Scheme document, which will contain the full terms and
conditions of the Acquisition, including details of how the transaction may be
accepted. Any acceptance or other response to the transaction should be made
only on the basis of the information in the Offer Document or Scheme Document
(as appropriate). 
 
The Acquisition relates to the shares of an English company and is subject to
UK procedural and disclosure requirements that are different from certain of
those of the US. Any financial statements or other financial information
included in this Announcement may have been prepared in accordance with non-US
accounting standards that may not be comparable to the financial statements of
US companies or companies whose financial statements are prepared in
accordance with generally accepted accounting principles in the US. It may be
difficult for US holders of shares to enforce their rights and any claims they
may have arising under the US federal securities laws in connection with the
Acquisition, since Melrose and GKN are located in countries other than the US,
and some or all of their officers and directors may be residents of countries
other than the United States. US holders of shares in Melrose or GKN may not
be able to sue Melrose, GKN or their respective officers or directors in a
non-US court for violations of US securities laws. Further, it may be
difficult to compel Melrose, GKN and their respective affiliates to subject
themselves to the jurisdiction or judgment of a US court. 
 
It is intended that the Acquisition will be implemented by way of a takeover
offer under English law. Accordingly, the Acquisition will be made in the US
pursuant to Section 14(e) and Regulation 14E under the US Exchange Act as a
"Tier II" tender offer, and otherwise in accordance with the requirements of
the City Code. Accordingly, the Acquisition will be subject to disclosure and
other procedural requirements, including with respect to withdrawal rights,
offer timetable, settlement procedures and timing of payments that may be
different from those applicable under US domestic tender offer procedures and
law. A person who receives New Melrose Shares pursuant to the Acquisition may
not resell such securities without registration under the US Securities Act or
without an applicable exemption from registration or in a transaction not
subject to registration (including a transaction that satisfies the applicable
requirements of Regulation S under the US Securities Act). 
 
Alternatively, the Acquisition may be implemented by way of a scheme of
arrangement under English law which is not subject to the tender offer rules
under the US Exchange Act, in which case the Acquisition would be subject to
the disclosure requirements and practices applicable in the UK to schemes of
arrangement which differ from the disclosure requirements of the US tender
offer rules. If the Acquisition is implemented by way of a scheme of
arrangement, the New Melrose Shares would be expected to be issued in reliance
upon the exemption from the registration requirements of the US Securities Act
provided by Section 3(a)(10) of the US Securities Act. Section 3(a)(10)
exempts securities issued in exchange for one or more outstanding securities
from the general requirements of registration where the terms and conditions
of the issuance and exchange of such securities have been approved by a court,
after a hearing on the fairness of the terms and conditions of the issuance
and exchange at which all persons to whom such securities will be issued have
the right to appear and be heard. The Court would hold a hearing on the
Scheme's fairness to GKN Shareholders, at which hearing all such shareholders
would be entitled to attend in person or through counsel. If the Acquisition
is implemented by way of the Scheme, a person who receives New Melrose Shares
pursuant to the Offer or Scheme and who is an affiliate of Melrose may not
resell such securities without registration under the US Securities Act or
pursuant to the applicable resale provisions of Rule 144 under the US
Securities Act or another applicable exemption from registration or in a
transaction not subject to registration (including a transaction that
satisfies the applicable requirements of Regulation S under the US Securities
Act). Whether a person is an affiliate of a company for the purposes of the US
Securities Act depends on the circumstances, but affiliates can include
certain officers, directors and significant shareholders. Persons who believe
that they may be affiliates of Melrose should consult their own legal advisers
prior to any sale of securities received pursuant to the Scheme. 
 
This Announcement does not constitute an offer of securities for sale in the
US. Securities may not be offered or sold in the United States absent
registration or an exemption from registration. Melrose does not intend to
make a public offering of securities in the US, but if undertaken any such
public offering would need to be made by a means of a prospectus that would
contain detailed information about the company and management, as well as
financial statements. No offer to acquire securities or to exchange securities
for other securities has been made, or will be made, directly or indirectly,
in or into, or by use of the mails, any means or instrumentality of interstate
or foreign commerce or any facilities of a national securities exchange of,
the US or any other country in which such offer may not be made other than (i)
in accordance with the US Securities Act, as amended, or the securities laws
of such other country, as the case may be, or (ii) pursuant to an available
exemption from such requirements. In particular, New Melrose Shares will only
be made available in the United States to qualified institutional buyers (as
defined in Rule 144A under the US Securities Act) or accredited investors (as
defined in Rule 501(a) under the US Securities Act) in transactions that are
exempt from the registration requirements of the US Securities Act. Such
shareholders will be required to make such acknowledgements and
representations to, and agreements with, Melrose as Melrose may require to
establish that they are entitled to receive New Melrose Shares. 
 
Nothing in this Announcement shall be deemed an acknowledgement that any SEC
filing is required or that an offer requiring registration under the US
Securities Act may ever occur in connection with the Acquisition. 
 
The New Melrose Shares have not been, and will not be, registered under the
securities laws of any state or jurisdiction in the United States and,
accordingly, will only be issued to the extent that exemptions from the
registration or qualification requirements of state "blue sky" securities laws
are available or such registration or qualification requirements have been
complied with. 
 
Cautionary note regarding forward looking statements 
 
This Announcement contains certain forward looking statements with respect to
the financial condition, results of operations and businesses of Melrose and
GKN and their respective groups, and certain plans and objectives of Melrose
with respect to the Enlarged Group. All statements other than statements of
historical fact are, or may be deemed to be, forward looking statements.
Forward looking statements are statements of future expectations that are
based on management's current expectations and assumptions and involve known
and unknown risks and uncertainties that could cause actual results,
performance or events to differ materially from those expressed or implied in
these statements. Forward looking statements include, among other things,
statements concerning the potential exposure of Melrose, the Melrose Group,
GKN, the GKN Group and/or the Enlarged Group to market risks and statements
expressing management's expectations, beliefs, estimates, forecasts,
projections and assumptions, including as to future potential cost savings,
synergies, earnings, cash flow, return on average capital employed, production
and prospects. These forward looking statements are identified by their use of
terms and phrases such as "anticipate", "believe", "could", "estimate",
"expect", "goals", "intend", "may", "objectives", "outlook", "plan",
"probably", "project", "risks", "seek", "should", "target", "will" and similar
terms and phrases. 
 
There are a number of factors that could affect the future operations of
Melrose, the Melrose Group, GKN, the GKN Group and/or the Enlarged Group and
that could cause results to differ materially from those expressed in the
forward looking statements included in this Announcement, including (without
limitation): (a) changes in demand for Melrose's and/or GKN's products; (b)
currency fluctuations; (c) loss of market share and industry competition; (d)
risks associated with the identification of suitable potential acquisition
properties and targets, and successful negotiation and completion of such
transactions; and (e) changes in trading conditions. 
 
All forward looking statements contained in this Announcement are expressly
qualified in their entirety by the cautionary statements contained or referred
to in this section. Readers should not place undue reliance on forward looking
statements. For a discussion of important factors which could cause actual
results to differ from forward-looking statements in relation to the Melrose
Group or the GKN Group, refer to the annual report and accounts of the Melrose
Group for the financial year ended 31 December 2016 and of the GKN Group for
the financial year ended 31 December 2016, respectively. 
 
Each forward looking statement speaks only as of the date of this
Announcement. Neither Melrose nor the Melrose Group undertakes any obligation
to publicly update or revise any forward looking statement as a result of new
information, future events or otherwise, except to the extent legally
required. In light of these risks, results could differ materially from those
stated, implied or inferred from the forward looking statements contained in
this Announcement. 
 
Rounding 
 
Certain figures included in this Announcement have been subjected to rounding
adjustments. Accordingly, figures shown for the same category presented in
different tables or forms may vary slightly and figures shown as totals in
certain tables or forms may not be an arithmetic aggregation of the figures
that precede them. 
 
No forecasts or estimates 
 
No statement in this Announcement (including any statement of estimated
synergies) is intended as a profit forecast, estimate or quantified financial
benefits statement for any period and no statement in this Announcement should
be interpreted to mean that cash flow from operations, free cash flow,
earnings or earnings per share for Melrose, GKN or the Enlarged Group, as
appropriate, for the current or future financial years would necessarily match
or exceed the historical published cash flow from operations, free cash flow,
earnings or earnings per share for Melrose or GKN as appropriate. 
 
Disclosure requirements of the City Code 
 
Under Rule 8.3(a) of the City Code, any person who is interested (directly or
indirectly) in 1 per cent. or more of any class of relevant securities of an
offeree company or of any securities exchange offeror (being any offeror other
than an offeror in respect of which it has been announced that its offer is,
or is likely to be, solely in cash) must make an Opening Position Disclosure
following the commencement of the offer period and, if later, following the
announcement in which any securities exchange offeror is first identified. 
 
An Opening Position Disclosure must contain details of the person's interests
and short positions in, and rights to subscribe for, any relevant securities
of each of (i) the offeree company and (ii) any securities exchange
offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a)
applies must be made by no later than 3.30 p.m. (London time) on the 10th
Business Day following the commencement of the offer period and, if
appropriate, by no later than 3.30 p.m. (London time) on the 10th Business Day
following the announcement in which any securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of the
offeree company or of a securities exchange offeror prior to midnight on the
day before the deadline for making an Opening Position Disclosure must instead
make a dealing disclosure. 
 
Under Rule 8.3(b) of the City Code, any person who is, or becomes, interested
(directly or indirectly) in 1 per cent. or more of any class of relevant
securities of the offeree company or of any securities exchange offeror must
make a dealing disclosure if the person deals in any relevant securities of
the offeree company or of any securities exchange offeror. A dealing
disclosure must contain details of the dealing concerned and of the person's
interests and short positions in, and rights to subscribe for, any relevant
securities of each of (i) the offeree company and (ii) any securities exchange
offeror(s), save to the extent that these details have previously been
disclosed under Rule 8 and have not changed. A dealing disclosure by a person
to whom Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London
time) on the Business Day following the date of the relevant dealing. 
 
If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they will
be deemed to be a single person for the purpose of Rule 8.3. 
 
Opening Position Disclosures must also be made by the offeree company and by
any offeror and dealing disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4 of the City Code). 
 
Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and dealing disclosures must be made
can be found in the Disclosure Table on the Panel's website at
www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the offer period commenced and when any offeror was
first identified. You should contact the Panel's Market Surveillance Unit on
+44 (0)20 7638 0129 if you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a dealing disclosure. 
 
For the purpose of this section (Disclosure requirements of the City Code) and
the following section (Publication on website and availability of hard copies)
of this Announcement, "Business Day" means a day on which the London Stock
Exchange is open for the transaction of business. 
 
Publication on website and availability of hard copies 
 
A copy of this Announcement is and will be available, subject to certain
restrictions relating to persons resident in Restricted Jurisdictions, for
inspection on Melrose's website www.melroseplc.net by no later than 12 noon
(London time) on the Business Day following the date of this Announcement. For
the avoidance of doubt, the contents of the websites referred to in this
Announcement are not incorporated into and do not form part of this
Announcement. 
 
Melrose and GKN Shareholders may request a hard copy of this Announcement by
contacting Rothschild on +44 (0)20 7280 5000 or RBC Europe Limited on +44
(0)20 7653 4000. 
 
If you are in any doubt about the contents of this Announcement or the action
you should take, you are recommended to seek your own independent financial
advice immediately from your stockbroker, bank manager, solicitor, accountant
or from an independent financial adviser duly authorised under the Financial
Services and Markets Act 2000 (as amended) if you are located in the UK or, if
you are located outside the UK, from an appropriately authorised independent
financial adviser. 
 
Appendix 1 
 
CONDITIONS TO AND CERTAIN FURTHER TERMS OF THE Acquisition 
 
Part A

Conditions to the Acquisition 
 
The Acquisition will be conditional upon: 
 
Acceptance Condition 
 
(a)        valid acceptances of the Offer having been received (and not, where
permitted, withdrawn) by no later than 1.00 p.m. on the first closing date of
the Offer as specified in the Offer Document (or such later times and/or dates
as Melrose may, subject to the rules of the City Code or with the consent of
the Panel, decide) in respect of 90 per cent. (or such lesser percentage as
Melrose may decide) of GKN Shares to which the Offer relates and of the voting
rights attached to those shares provided that this Condition will not be
satisfied unless Melrose and/or any member of the Melrose Group has acquired
or agreed to acquire (whether pursuant to the Offer or otherwise) GKN Shares
carrying in aggregate more than 50 per cent. of the voting rights then
normally exercisable at a general meeting of GKN; 
 
For the purposes of this Condition (a): 
 
i.    GKN Shares which have been unconditionally allotted but not issued
before the Offer becomes or is declared unconditional as to acceptances,
whether pursuant to the exercise of any outstanding subscription or conversion
rights or otherwise, shall be deemed to carry the voting rights they will
carry upon issue; 
 
ii.    valid acceptances shall be deemed to have been received in respect of
GKN Shares which are treated for the purposes of Part 28 of the Act as having
been acquired or contracted to be acquired by Melrose, whether by virtue of
acceptance of the Offer or otherwise; 
 
iii.   the expression "GKN Shares to which the Offer relates" shall be
construed in accordance with Chapter 3 of Part 28 of the Act; and 
 
iv.   all percentages of voting rights and share capital are to be calculated
by reference to the percentage held and in issue outside treasury; 
 
In addition, the Offer will be conditional upon the following Conditions and,
accordingly, the Offer will not become or be declared wholly unconditional
unless the following Conditions (as amended if appropriate) have been
satisfied or, where relevant, waived: 
 
Melrose Shareholder approval 
 
(b)        the passing at the Melrose General Meeting (or at any adjournment
thereof) of such resolution or resolutions as are necessary to approve,
implement and effect the Acquisition and the acquisition of any GKN Shares
including a resolution or resolutions to authorise the allotment of New
Melrose Shares pursuant to the Acquisition and approve the Acquisition in
accordance with Class 1 requirements under Listing Rule 10.5.1R(2) (as such
resolutions shall be set out in the Melrose Circular in due course); 
 
Admission to listing 
 
(c)        (i) the admission to the Official List of the New Melrose Shares to
be issued on the Effective Date in connection with the Acquisition becoming
effective in accordance with the Listing Rules and the admission of such
shares to trading becoming effective in accordance with the Admission and
Disclosure Standards of the London Stock Exchange or (ii) if Melrose so
determines (and subject to the consent of the Panel) (aa) the UK Listing
Authority having acknowledged to Melrose or its agent (and such
acknowledgement not having been withdrawn) that the application for the
admission of the New Melrose Shares to the Official List with a premium
listing has been approved and (after satisfaction of any conditions to which
such approval is expressed to be subject ("listing conditions")) will become
effective as soon as a dealing notice has been issued by the FCA and any
listing conditions having been satisfied and (bb) the London Stock Exchange
having acknowledged to Melrose or its agent (and such acknowledgement not
having been withdrawn) that the New Melrose Shares will be admitted to the
Official List with a premium listing and to trading on the main market for
listed securities of the London Stock Exchange; 
 
CFIUS and US defence 
 
(d)        (i) CFIUS having determined either (aa) that the Acquisition is not
a "covered transaction"; (bb) that it is a "covered transaction", and there
are no unresolved national security issues, either unconditionally or subject
to such conditions in a mitigation agreement satisfactory to Melrose; or (cc)
CFIUS shall have sent a report to the President of the United States
requesting the President's decision and the President shall have announced a
decision not to take any action to suspend, prohibit or place any limitations
on the Acquisition, or the time permitted by law for such action shall have
lapsed; (ii) insofar as the Acquisition is required to be notified to the DDTC
pursuant to section 122.4(b) of ITAR, all necessary notifications and filings
have been made and all applicable waiting or notification periods have
expired, lapsed or been terminated or waived as appropriate in each case in
respect of the Acquisition without the DDTC having revoked any ITAR
registration held by any member of the GKN Group or having imposed any
conditions on any such registration which are not satisfactory to Melrose; and
(iii) the DSS having signed and returned an executed counterpart of the
commitment letter submitted by Melrose and GKN, approving in principle the
measures to be implemented following the Effective Date to mitigate any issues
arising from the participation of Melrose in the Acquisition, without
invalidating, suspending or otherwise terminating any of the facility
clearances possessed by GKN Group or any of its affiliates; 
 
German defence Condition 
 
(e)        the BMWi having (i) confirmed in writing that the Acquisition does
not fall within the scope of the sector-specific investment regime and,
therefore, does not require clearance pursuant to section 61, sentence 1 of
the AWV; (ii) issued clearance in writing pursuant to section 61, sentence 1
of the German Foreign Trade Ordinance; (iii) not initiated a formal
investigation of the Acquisition within three months following receipt of the
report pursuant to section 60, paragraph 3 of the AWV and, therefore,
clearance is deemed to have been issued in accordance with section 61,
sentence 2 of the AWV; or (iv) not prohibited or restricted the Acquisition
within three months following receipt of the relevant documentation pursuant
to section 62, paragraph 1 of the AWV; 
 
French defence Condition 
 
(f)        (i) the French Ministry of Economy having provided clearance in
respect of the Acquisition in relation to foreign investment control in
respect of sensitive sectors provided under articles R. 153-1 et seq. of the
French Monetary and Financial Code ("French Foreign Investment Control"); or
(ii) the French Ministry of Economy and Foreign Investment Control having
confirmed that French Foreign Investment Control is not required in relation
to the Acquisition; 
 
European Commission clearance 
 
(g)        insofar as the Acquisition constitutes, or is deemed to constitute,
a concentration with an EU dimension within the scope of the EU Merger
Regulation (the "EUMR"): 
 
(i)         the European Commission indicating, on terms satisfactory to
Melrose, that it does not intend to initiate proceedings under Article 6(1)(c)
of the EUMR in respect of the Acquisition (or being deemed to have done so
under Article 10(6) of the EUMR); 
 
(ii)        no indication having been made that a European Union or EFTA state
may take appropriate measures to protect legitimate interests pursuant to
Article 21(4) of the EUMR in relation to the Acquisition or any aspect of it;
and 
 
(iii)       to the extent that the European Commission refers any aspect of
the Acquisition to a competent authority of any Member State of the European
Union or EFTA, under Article 9 of the EUMR, all relevant notifications or
filings having been made, all appropriate waiting periods having expired,
lapsed or been terminated and all such clearances or approvals having been
granted (or being deemed to have been granted in accordance with the relevant
law) provided that each such clearance or approval has an equivalent effect to
the decision referred to in Condition (g)(i) above; 
 
US Anti-Trust 
 
(h)        all filings having been made and all appropriate waiting periods
under the United States HartScottRodino Antitrust Improvements Act of 1976 and
the regulations thereunder having expired, lapsed or been terminated as
appropriate without the issuance of a second request in each case in respect
of the Acquisition and the Acquisition of the GKN Shares by Melrose or any
member of the Melrose Group; 
 
Canada 
 
(i)         insofar as the Acquisition is subject to mandatory notification
under Part IX of the Competition Act (Canada), either: 
 
(i)         the Commission of Competition having issued an advanced ruling
certificate under subsection 102(1) of the Competition Act (Canada); or 
 
(ii)        (A) any applicable waiting period under the Competition Act
(Canada) having expired or been waived, and (B) unless waived in writing by
Melrose, at its sole discretion, Melrose having received written confirmation
from the Commission of Competition stating that the Commissioner of
Competition does not intend to make an application under section 92 of the
Competition Act (Canada) in respect of the Acquisition; 
 
Merger control clearance in any other jurisdiction 
 
(j)         to the extent that any other merger control consents or approvals
are required or desirable prior to the completion of the Acquisition according
to the law of any other jurisdiction (including, without limitation,
Australia, Colombia, India, Mexico, Russia, South Africa, Taiwan and Turkey),
all relevant notifications or filings having been made, all appropriate
waiting periods having expired, lapsed or been terminated and all such
clearances or approvals having been granted (or being deemed to have been
granted in accordance with the relevant law) provided that each such clearance
or approval is on terms satisfactory to Melrose; 
 
General Third Party clearances 
 
(k)        the waiver (or non-exercise within any applicable time limits) by
any relevant government or governmental, quasi-governmental, supranational,
statutory, regulatory, environmental or investigative body, court, trade
agency, association, institution, any entity owned or controlled by any
relevant government or state, or any other body or person whatsoever in any
jurisdiction (each a "Third Party") of any termination right, right of
pre-emption, first refusal or similar right (which is material in the context
of the Wider GKN Group taken as a whole) arising as a result of or in
connection with the Acquisition including, without limitation, its
implementation and financing or the proposed direct or indirect acquisition of
any shares or other securities in, or control of, GKN by Melrose or any member
of the Melrose Group; 
 
(l)         all necessary filings or applications having been made in
connection with the Acquisition and all statutory or regulatory obligations in
any jurisdiction having been complied with in connection with the Acquisition
or the acquisition by any member of the Wider Melrose Group of any shares or
other securities in, or control of, GKN and all Authorisations reasonably
deemed necessary or appropriate by Melrose or any member of the Wider Melrose
Group for or in respect of the Acquisition including without limitation, its
implementation and financing or the proposed direct or indirect acquisition of
any shares or other securities in, or control of, GKN or any member of the
Wider GKN Group by any member of the Wider Melrose Group having been obtained
in terms and in a form satisfactory to Melrose from all appropriate Third
Parties or persons with whom any member of the Wider GKN Group has entered
into contractual arrangements and all such Authorisations together with all
material authorisations orders, recognitions, grants, licences, confirmations,
clearances, permissions and approvals necessary or appropriate to carry on the
business of any member of the Wider GKN Group which is material in the context
of the Melrose Group or the GKN Group as a whole or of the financing of the
Acquisition remaining in full force and effect and all filings necessary for
such purpose having been made and there being no notice or intimation of any
intention to revoke or not to renew any of the same at the time at which the
Acquisition becomes otherwise unconditional and all necessary statutory or
regulatory obligations in any jurisdiction having been complied with; 
 
(m)       no Third Party having given notice of a decision to take, institute,
implement or threaten any action, proceeding, suit, investigation, enquiry or
reference (and, in each case, not having withdrawn the same), or having
enacted, made or proposed any statute, regulation, decision or order, or
change to published practice or having taken any other steps, and there not
continuing to be outstanding any statute, regulation, decision or order, which
in each case would or might reasonably be expected to: 
 
(i)         require, prevent or delay the divestiture, or materially alter the
terms envisaged for any proposed divestiture by any member of the Wider
Melrose Group or any member of the Wider GKN Group of all or any portion of
their respective businesses, assets or property or impose any limitation on
the ability of any of them to conduct their respective businesses (or any of
them) or to own any of their respective assets or properties or any part
thereof which, in any such case, is material in the context of the Wider
Melrose Group or the Wider GKN Group in either case taken as a whole; 
 
(ii)        require, prevent or delay the divestiture by any member of the
Wider Melrose Group of any shares or other securities in GKN; 
 
(iii)       impose any material limitation on, or result in a delay in, the
ability of any member of the Wider Melrose Group directly or indirectly to
acquire or to hold or to exercise effectively any rights of ownership in
respect of shares or loans or securities convertible into shares or any other
securities (or the equivalent) in any member of the Wider GKN Group or the
Wider Melrose Group or to exercise voting or management control over any such
member; 
 
(iv)       otherwise adversely affect the business, assets, profits or
prospects of any member of the Wider Melrose Group or of any member of the
Wider GKN Group to an extent which is material in the context of the Wider
Melrose Group or the Wider GKN Group in either case taken as a whole; 
 
(v)        make the Acquisition or its implementation or the acquisition or
proposed acquisition by Melrose or any member of the Wider Melrose Group of
any shares or other securities in, or control of GKN void, illegal, and/or
unenforceable under the laws of any jurisdiction, or otherwise, directly or
indirectly, restrain, restrict, prohibit, delay or otherwise interfere with
the same, or impose additional conditions or obligations with respect
thereto; 
 
(vi)       require any member of the Wider Melrose Group or the Wider GKN
Group to offer to acquire any shares or other securities (or the equivalent)
or interest in any member of the Wider GKN Group or the Wider Melrose Group
owned by any third party; 
 
(vii)      impose any limitation on the ability of any member of the Wider GKN
Group to co-ordinate its business, or any part of it, with the businesses of
any other members which is adverse to and material in the context of the Wider
GKN Group taken as a whole or in the context of the Acquisition; or 
 
(viii)      result in any member of the Wider GKN Group ceasing to be able to
carry on business under any name under which it presently does so, 
 
and all applicable waiting and other time periods (including any extensions
thereof) during which any such Third Party could institute, implement or
threaten any action, proceeding, suit, investigation, enquiry or reference or
any other step under the laws of any jurisdiction in respect of the
Acquisition or the acquisition or proposed acquisition of any GKN Shares
having expired, lapsed or been terminated; 
 
Certain matters arising as a result of any arrangement, agreement etc. 
 
(n)        save as Disclosed, there being no provision of any agreement,
arrangement, licence, permit or other instrument to which any member of the
Wider GKN Group is a party or by or to which any such member or any of its
assets may be bound, entitled or subject, which in consequence of the
Acquisition or the proposed acquisition of any shares or other securities (or
equivalent) in GKN or because of a change in the control or management of GKN
or otherwise, could or might result in any of the following to an extent which
is material and adverse in the context of the Wider GKN Group, or the Wider
Melrose Group, in either case taken as a whole, or in the context of the
Acquisition: 
 
(i)         any moneys borrowed by or any other indebtedness (actual or
contingent) of, or grant available to any such member, being or becoming
repayable or capable of being declared repayable immediately or earlier than
their or its stated maturity date or repayment date or the ability of any such
member to borrow moneys or incur any indebtedness being withdrawn or inhibited
or being capable of becoming or being withdrawn or inhibited; 
 
(ii)        any such agreement, arrangement, licence, permit or instrument or
the rights, liabilities, obligations or interests of any such member
thereunder being terminated or modified or affected or any obligation or
liability arising or any action being taken or arising thereunder; 
 
(iii)       any assets or interests of any such member being or falling to be
disposed of or charged or any right arising under which any such asset or
interest could be required to be disposed of or charged; 
 
(iv)       the creation or enforcement of any mortgage, charge or other
security interest over the whole or any part of the business, property or
assets of any such member; 
 
(v)        the rights, liabilities, obligations or interests of any such
member in, or the business of any such member with, any person, firm or body
(or any arrangement or arrangements relating to any such interest or business)
being terminated, adversely modified or affected; 
 
(vi)       the value of any such member or its financial or trading position
or prospects being prejudiced or adversely affected; 
 
(vii)      any such member ceasing to be able to carry on business under any
name under which it presently does so; or 
 
(viii)      the creation or acceleration of any liability, actual or
contingent, by any such member, 
 
and no event having occurred which, under any provision of any agreement,
arrangement, licence, permit or other instrument to which any member of the
Wider GKN Group is a party or by or to which any such member or any of its
assets may be bound, entitled or subject, would or might reasonably be
expected to result in any of the events or circumstances as are referred to in
sub-paragraphs(i) to (viii) of this Condition; 
 
Certain events occurring since 31 December 2016 
 
(o)        save as Disclosed, no member of the Wider GKN Group having, since
31 December 2016: 
 
(i)         save as between GKN and wholly-owned subsidiaries of GKN or for
GKN Shares issued under or pursuant to the exercise of options and vesting of
awards granted under the GKN Share Schemes, issued or agreed to issue,
authorised or proposed the issue of additional shares of any class; 
 
(ii)        save as between GKN and wholly-owned subsidiaries of GKN or for
the grant of options and awards and other rights under the GKN Share Schemes,
issued or agreed to issue, authorised or proposed the issue of securities
convertible into shares of any class or rights, warrants or options to
subscribe for, or acquire, any such shares or convertible securities; 
 
(iii)       other than to another member of the GKN Group, prior to completion
of the Acquisition, recommended, declared, paid or made any dividend or other
distribution payable in cash or otherwise; 
 
(iv)       save for intra-GKN Group transactions, merged or demerged with any
body corporate or acquired or disposed of or transferred, mortgaged or charged
or created any security interest over any assets or any right, title or
interest in any asset (including shares and trade investments) or authorised
or proposed or announced any intention to propose any merger, demerger,
acquisition or disposal, transfer, mortgage, charge or security interest, in
each case, other than in the ordinary course of business and, in each case, to
the extent which is material in the context of the Wider GKN Group taken as a
whole; 
 
(v)        save for intra-GKN Group transactions, made or authorised or
proposed or announced an intention to propose any change in its loan capital
in each case, to the extent which is material in the context of the Wider GKN
Group taken as a whole; 
 
(vi)       issued, authorised or proposed the issue of any debentures or (save
for intra- GKN Group transactions), save in the ordinary course of business,
incurred or increased any indebtedness or become subject to any contingent
liability; 
 
(vii)      purchased, redeemed or repaid or announced any proposal to
purchase, redeem or repay any of its own shares or other securities or reduced
or, save in respect to the matters mentioned in sub-paragraphs(i)or(ii) above,
made any other change to any part of its share capital in each case, to the
extent which is material in the context of the Wider GKN Group taken as a
whole; 
 
(viii)      save for Intra-GKN Group transactions, implemented, or authorised,
proposed or announced its intention to implement, any reconstruction,
amalgamation, scheme, commitment or other transaction or arrangement otherwise
than in the ordinary course of business; 
 
(ix)       entered into or varied or authorised, proposed or announced its
intention to enter into or vary any contract, transaction or commitment
(whether in respect of capital expenditure or otherwise) which is of a long
term, onerous or unusual nature or magnitude or which involves or could
involve an obligation of such a nature or magnitude other than in the ordinary
course of business, in each case, to the extent which is material in the
context of the Wider GKN Group taken as a whole; 
 
(x)        (other than in respect of a member which is dormant and was solvent
at the relevant time) taken any corporate action or steps or had any legal
proceedings started or threatened against it in relation to the suspension of
payments, a moratorium of any indebtedness, its winding-up, dissolution or
reorganisation or for the appointment of a receiver, administrative receiver,
administrator, manager, trustee or similar officer of all or any part of its
assets or revenues or any analogous proceedings in any jurisdiction or
appointed any analogous person in any jurisdiction or had any such person
appointed, in each case, to the extent which is material in the context of the
Wider GKN Group taken as a whole; 
 
(xi)       entered into any contract, transaction or arrangement which would
be restrictive on the business of any member of the Wider GKN Group or the
Wider Melrose Group other than of a nature and extent which is normal in the
context of the business concerned; 
 
(xii)      waived or compromised any claim otherwise than in the ordinary
course of business which is material in the context of the Wider GKN Group
taken as a whole; 
 
(xiii)      made any material alteration to its memorandum or articles of
association or other incorporation documents; 
 
(xiv)     been unable, or admitted in writing that it is unable, to pay its
debts or commenced negotiations with one or more of its creditors with a view
to rescheduling or restructuring any of its indebtedness, or having stopped or
suspended (or threatened to stop or suspend) payment of its debts generally or
ceased or threatened to cease carrying on all or a substantial part of its
business; 
 
(xv)      entered into any contract, commitment, arrangement or agreement
otherwise than in the ordinary course of business or passed any resolution or
made any offer (which remains open for acceptance) with respect to or
announced any intention to, or proposed to, effect any of the transactions,
matters or events referred to in this Condition (o); 
 
(xvi)     made or agreed or consented to any change to: 
 
(A)       the terms of the trust deeds constituting the pension scheme(s)
established by any member of the Wider GKN Group for its directors, employees
or their dependents; 
 
(B)       the contributions payable to any such scheme(s) or to the benefits
which accrue or to the pensions which are payable thereunder; 
 
(C)       the basis on which qualification for, or accrual or entitlement to,
such benefits or pensions are calculated or determined; or 
 
(D)       the basis upon which the liabilities (including pensions) of such
pension schemes are funded, valued or made, 
 
in each case, to the extent which is material in the context of the Wider GKN
Group taken as a whole; 
 
(xvii)     proposed, agreed to provide or modified the terms of any of the GKN
Share Plans or other benefit constituting a material change relating to the
employment or termination of employment of a material category of persons
employed by the Wider GKN Group or which constitutes a material change to the
terms or conditions of employment of any senior employee of the Wider GKN
Group, save as agreed by the Panel (if required) and by Melrose, or entered
into or changed the terms of any contract with any director or senior
executive; or 
 
(xviii)    taken (or agreed or proposed to take) any action which requires, or
would require, the consent of the Panel or the approval of GKN Shareholders in
general meeting in accordance with, or as contemplated by, Rule 21.1 of the
City Code; 
 
No adverse change, litigation or regulatory 

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