GKN considers land systems division sale

Mon, 24 Aug 2015 | DIVISION SALE

A sale of GKN's land systems and heavy equipment division could be on the cards in the coming weeks, The Sunday Times has reported.

Engineering giant GKN is reportedly considering the sale in light of a prolonged decline in demand for its heavy equipment.

A broader informal review of the company and its different areas of operation brought the issue to light and the division is now being considered for disposal as a result.

City sources told the paper that a number of private equity firms have already been showing an interest in Land Systems for some time, however, a quick sale does not appear to be on the cards and a formal sales process has not been entered into.

GKN produces components for vehicles used in mining, construction and farming. If it doesn't pursue a sale of the land systems division it may also look into folding some of its operations into its driveline business to assist development of vehicle power mechanisms.

The division's half-year results in July revealed a decline in the land systems division revenues of 13 per cent. Revenue dropped to £371 million while trading profit more than halved to £15 million.

Despite this, the company's chief executive has expressed confidence that the division will return to growth, albeit not in 2015. Potential buyers may well be looking at the long game when considering the potential for an acquisition.

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