A REDDITCH company has rejected a £7 billion takeover bid.

Shares in GKN, one of the UKs biggest engineering firms, have rocketed after the company revealed it turned down a bid from Melrose.

The company, which is based on Ipsley Church Lane, said on Friday that it rebuffed an “opportunistic” and “unsolicited” proposal from the turnaround specialist as it undervalued GKN.

The offer represented a price of 405p per share, comprising 80 per cent in new Melrose shares and 20 per cent in cash.

“The board of GKN has considered the proposal together with its financial advisers… and has unanimously rejected it, having concluded that the proposal is entirely opportunistic and that the terms fundamentally undervalue the company and its prospects," GKN said.

“In addition, the proposal would materially dilute the exposure of GKN shareholders to the meaningful upside opportunities that the board believes are present within the company."

Shares in GKN rocketed 24 per cent or to 413p in morning trading following the announcement.

The takeover tilt comes at a difficult time for GKN, which in November ditched its incoming boss less than two months before he was due to take the top job as it warned over another hit in its troubled US plant.

The group ousted Kevin Cummings, GKN’s aerospace head, who was due to take over from incumbent chief executive Nigel Stein in January.

The firm has instead appointed non-executive director Anne Stevens as interim chief executive and on Friday confirmed her as the company’s permanent boss.

GKN, which makes wing tips for Airbus and parts for car giants including Mercedes and Jaguar Land Rover, also revealed last year that a review of its US aerospace plants had uncovered additional write-offs of between £80 million and £130 million.

It had previously expected to write off £15 million on its Alabama facility, relating to “revised assumptions” on programme inventory and receivables balances, which sparked a wider review across the division.