By Ben Martin
LONDON (Reuters) - Activist hedge fund Elliott has disclosed a stake in takeover target GKN (L:GKN) just days after the British engineering company announced it had rejected a 7 billion-pound bid from turnaround specialist Melrose Industries (L:MRON).
Elliott, a U.S. firm with a track-record for intervening in takeovers, disclosed that it held a 1.7 percent interest in GKN through contracts for difference on Monday. It also holds a 0.5 percent short position in Melrose shares via CfDs, a stock exchange filing showed.
It comes after FTSE 100-listed GKN announced on Jan. 12 that it had rejected a 405 pence-a-share unsolicited paper-and-cash bid from Melrose on the grounds that the approach was "entirely opportunistic" and had "fundamentally" undervalued the aerospace and automotive parts supplier. GKN said that it intends to split itself in two instead.
Elliott has been an investor in GKN for "some time" and believes the engineer has underperformed, according to a person close to the situation.
"The company (GKN) should be talking to Melrose", the person said.
Elliott has become increasingly active in the UK in recent years. It was among investment firms that forced brewer Anheuser-Busch InBev to hike its bid for rival beer business SABMiller (LON:SAB) in 2016.
London-listed Melrose on Monday signalled its determination to pursue a takeover of GKN by announcing that it had started to meet with GKN investors to discuss its bid for the engineer.
A spokesman for Elliott declined to comment. GKN did not return a request for comment.