Written by James Clench • Published 23rd March 2018 • 3 minute read
Quiz time. Which company made the cannonballs used by the Duke of Wellington’s army in the Napoleonic Wars?
If you have been following the twists and turns of the hostile takeover of the year in the last two and a half months, you will, without hesitation, know the answer: Guest, Keen & Nettlefolds.
This nugget of information about the manufacture of 18th-century projectiles has been trotted out by journalists in countless reports on the bid by turnaround specialist Melrose to buy engineering firm GKN, as it is now known.
GKN would no doubt love to wheel a cannon round to the Mayfair offices of Melrose, take aim and spark the gunpowder.
But the 21st century battle for survival is being fought in the business pages of the broadsheets instead of Waterloo.
And the weaponry is a little more sophisticated – if every bit as deadly in its own way.
The fight has been framed by the personalities involved and specifically their credibility with investors.
GKN faced accusations of having poor leadership that had led to underwhelming returns for shareholders.
Melrose’s perception problem was at the other end of the spectrum: it was too profit focused and would ruthlessly put short-term gain before long-term stability.
Mike Turner, chairman of GKN, was portrayed as the no-nonsense “northern bruiser” and “engineering royalty.” (He also holds down the chairman’s job at industrial giant Babcock and is ex CEO of leading aerospace business BAE).
When Melrose’s unwanted approach came in early January, Turner took decisive action and gave temporary CEO Anne Stevens the permanent position.
Stevens, an American who had risen to become Ford’s COO for the US, became the seventh woman CEO in the current FTSE 100.
She fired off an early PR salvo by giving an interview to the FT. It began with an anecdote that illustrated Stevens had a core of steel.
She had devised a plan for the chairman of Ford to cut losses at its US operation. It required a 30 percent cut to the salaried workforce and the closure of 17 sites.
Stevens told the FT: “He asked me what his options were. I said your other option is bankruptcy.”
The article pored over Stevens’ personal and professional background, including her impressive achievement of being named four times in Fortune magazine’s list of the 50 most powerful women in business.
The message was clear: there are no doubts about the leadership ability of Anne Stevens.
GKN also branded Melrose’s £7.4million offer as “derisory” and accused the firm of “financial engineering”.
Melrose hit back. Understanding that personal credibility could swing the deal, CEO Simon Peckham was put up for an interview in the Sunday Times.
Peckham insisted he would rise above the fray: “We’re not interested in engaging in slanging matches on personalities, and we haven’t and won’t. We think we should be grown up about it.”
Unfortunately, as journalist John Collingridge pointed out, David Roper, executive vice-chairman of Melrose, had already described the GKN workforce as “lions led by donkeys”.
Peckham used his slot to undermine GKN’s rich past – yes, those cannonballs again– by reminding people that British Leyland had once had a heritage.
He added: “Just because something is 250 years old does not mean it’s got a right to survive for the next 250 years.”
Much of the interview was clearly shaped by Peckham’s determination to shed the image of ruthless City slicker.
The opening paragraphs made clear that he didn’t like golf, wasn’t a disciple of buyout king Lord Hanson and his business was not a private equity firm.
He dismissed GKN’s criticism of Melrose as a “sort of Project Fear” – a cutting reference to the failed Remain campaign in the EU referendum.
And he spoke with pride about his father’s rise from apprentice Fleet Street printer to human resources director of a Tyneside printing firm.
If any reader was in any doubt that Peckham was a simple, down-to-earth family guy, the final line of the piece was a masterclass of repositioning: turning a hard-nosed City buyout expert into an altogether more cuddly prospect.
“I’m happiest with family and friends in a pub having a few pints of beer,” said Peckham. “I am by nature a social animal.”
Personal PR won’t be the only factor in deciding the ownership of GKN – £1billion pension deficits, a commitment to R&D and the willingness of clients like Airbus to work with a new team will all play their part.
But when shareholders cast their vote on March 29 to decide who is the victor and who is cannon-fodder, they will all have been influenced by a hard-fought PR campaign.