GKN believes it could mount a successful bid for T&N’s £400m sintered metals business if T&N merges with Federal-Mogul, a senior executive at GKN said this week.
GKN has been building up its own powdered metal business and acquired the aptly named Sinter Metals earlier this year for £352m. It had previously failed to persuade T&N to give up its powder metallurgy business.
‘Federal-Mogul came out of powdered metals a few years ago,’ said John Spruell, chief executive of GKN’s powder metallurgy division. He doubts their plans for T&N would include its sintered metals business.
Federal-Mogul has always denied it would break up T&N if the two companies merged. But the City and investors remain unconvinced because of the heavy borrowing needed by Federal-Mogul to fund a prospective £1.3bn takeover.
One significant investor in T&N told The Engineer that he would be in favour of accepting a GKN bid for T&N’s sintered metals business.
‘If Federal-Mogul decided to pay up and gear up, they might want to get a positive return for something like powdered metals,’ he said.
Federal-Mogul pulled out of sintered metals in 1995 when it sold its precision forged products division to Borg-Warner for $28m.
Federal-Mogul said this divestment happened under former chairman, Dennis Gormley, who wanted to build a retailing business. The bid for T&N reflects the move by Dick Snell, the present chairman, to get back into manufacturing. A spokeswoman for Federal-Mogul would not say whether this new strategy included sintered metals.
GKN man in buyout, page 2