Melrose bosses in line for millions as it gears up to float £4bn motor arm

Top bosses at Melrose are set to pocket millions when the FTSE 100 engineering company spins off its automotive business on the London Stock Exchange next month, The Mail on Sunday can reveal.

The demerger will be the latest move by Melrose – which buys struggling industrial companies, makes them more profitable and sells them on – after it snapped up engineering giant GKN for £8.1 billion in a viciously fought takeover in 2018.

Melrose is to focus on GKN’s aerospace business after it splits off the automotive division, which will be known as Dowlais and separately listed.

It is expected to be one of the biggest flotations on the London Stock Exchange this year, with a valuation of roughly £4 billion.

Simon Peckham, the boss of Melrose, will sit on the board of the new company and pocket shares worth £12 million, while finance director Geoffrey Martin is in line for stock valued at £8 million.

Dowlais chief executive Liam Butterworth – who has headed GKN Automotive since 2018 – could be in line to earn £5.3 million a year in salary and bonuses as well as shares worth £400,000.

Grandee Simon Mackenzie Smith – appointed by Peckham last month to chair Dowlais – will be handed a salary of £400,000 a year.

‘It’s certainly a very lucrative payday for the top brass. Even the chairman is set to walk away with nearly half a million,’ said Neil Wilson, an analyst at Markets.

According to sources, Mackenzie Smith has been brought in by Peckham for his deal-making expertise to help Dowlais find acquisitions. Previously, he had a 25-year career at Bank of America Merrill Lynch.

Educated at Radley public school, the Scottish aristocrat and four relatives recently sold Finegand Estate near Balmoral for £5 million. A staunch Remainer, his Instagram account includes a picture of him defacing a ‘Vote Leave’ poster in Essex near his house in June 2016 with the word ‘Bigots’.

The social media account is also littered with posts of him at charity events with celebrities such as American actress Eva Longoria, who appeared in the series Desperate Housewives.

In City circles he is best known as the banker who earned millions in 2007 from the flotation of Mike Ashley’s Sports Direct.

Other notable deals completed by the blue-blood include the sale of Selfridges to the billionaire Galen Weston for £628 million in 2003 and the float of Debenhams in 2006.

‘He’s clever, well liked, well connected and a little nutty,’ a banking source told The Mail on Sunday.

The Dowlais flotation is the latest twist in the saga since Melrose bought GKN in 2018 – the biggest hostile takeover since Kraft’s move on Cadbury a decade earlier.

Since then Melrose has restructured the business, including closing GKN’s automotive engineering plant in Birmingham with the loss of 500 jobs in 2021.

The Erdington site was renowned for making driveline systems for the car industry, with customers including Jaguar Land Rover.

The name Dowlais is a nod to the village in South Wales that was home to the industrial revolution-era iron and steelworks of the Guest family, one of the founders of the original Guest, Keen and Nettlefolds, later renamed GKN.

Mackenzie Smith made headlines ten years after the Sports Direct deal when court papers revealed he had played a game of spoof with Ashley over who should pay the £750,000 legal fees for the float.

It was claimed in the documents that Ashley was ‘bored and frustrated’ by the negotiations at a City meeting, and keen to get to a London casino, 50 St James.

He is said to have abruptly walked out, with Mackenzie Smith in hot pursuit, asking him about the fees.

Ashley proposed a game of spoof – where opponents try to guess the number of coins hidden by players – to decide who should pay.

After Mackenzie Smith ‘reluctantly agreed’, Ashley lost and was forced to cough up.