WORCESTERSHIRE engineering giant GKN has rejected a £7.4 billion takeover bill.

Melrose, which specialises in buying and rejuvenating manufacturers, claimed its bid would “re-energise and re-purpose” the embattled engineer.

GKN rebuffed the unwanted swoop saying the formal cash-and-stock offer was “effectively unchanged” from last week’s initial approach, which it rejected for undervaluing the firm.

GKN, which makes wing tips for Airbus and parts for car giants including Mercedes and Jaguar Land Rover, is based in Ipsley Church Lane, Redditch.

The offer values GKN at 430.1p a share, while Melrose is also proposing to take on around £1 billion of debt.

Under the reverse takeover, GKN shareholders would own around 57 per cent of the combined group and would become “major participants in the potential future value creation in both the GKN and Melrose businesses”, Melrose said.

Melrose, which specialises in buying and rejuvenating manufacturers, added its plan would “re-energise and re-purpose” GKN.

The unsolicited takeover bid for one of Britain’s oldest companies comes after Melrose sought to woo GKN shareholders this week in an effort to garner support for a deal. But GKN pointed out that the terms of the approach remain unchanged.

Anne Stevens, who was appointed permanent chief executive of GKN last week, said: “We believe GKN’s current owners should retain all the benefits of the clear upside potential in GKN, rather than handing almost half of this upside to Melrose and its shareholders.

“We have already stated that the terms of Melrose’s offer fundamentally undervalue the company and we are actively engaging with shareholders to explain how our transformation plan will provide value.”

The bid marks the UK’s biggest unsolicited takeover approach since Kraft’s controversial offer for Cadbury in 2009.