Today (12 January) GKN revealed that it had received an unsolicited offer from Melrose to acquire the company.
Shares in the company were up almost 24 per cent at 412.2p at the time of writing.
Meantime, GKN believes that value for its shareholders will be "maximised" by its separation of its aerospace and automotive divisions in order to set "distinct strategic, operational and financial objectives for the [two] businesses, with clear focus, accountability and better-aligned incentive plans".
In accordance with the UK's takeover rules, Melrose has until 5.00pm on 9 February 2018 to counter with a new offer for GKN.
"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".
The automotive and aerospace components manufacturer also said that Anne Stevens has agreed to become the company's permanent chief executive with immediate effect.
"The board of GKN has considered the proposal. and has unanimously rejected it, having concluded that the proposal is entirely opportunistic and that the terms fundamentally undervalue the company and its prospects", it said in a statement reported by Reuters.
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Last year, lower profit margins and cash generation prompted GKN to conduct a wide-ranging review of its business.
The firm issued a profit warning in October over problems at its aerospace division.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said the separation of units has "been on the cards for years, with little obvious crossover between the two businesses".
A two-year programme dubbed "Project Boost" has been launched to "significantly" improve performance across the business.
'Historically, the pension deficit has held the group together, but with the sprawling footprint likely to have contributed to recent profit warnings, the reasons for divorce now seem to outweigh the costs of splitting'.
In November, the company announced that its CEO designate Kevin Cummings was leaving the company with immediate effect following a profit warning brought about by difficulties on United States aerospace operations.
For 2017, the company continues to expect management pretax profit to be slightly ahead of GBP678 million recorded in 2016, before additional Aerospace write-offs announced in November previous year. This is before accounting for the previously announced substantial write-offs in the North American Aerospace business.