It said the offer was "entirely opportunistic" and "fundamentally undervalues the company and its prospects".
GKN's board dismissed the offer from Melrose in a unanimous decision. Compounding the upheaval, the United Kingdom decision to leave the European Union has clouded the outlook for the country's autoparts manufacturers due to their reliance on open trade.
On the appointment of Stevens as new chief executive, the firm's chairman Mike Turner said she "has the track record to transform GKN", pointing to her "successful turnaround" of The Ford Motor Company's Mexico, Canada and South America businesses and senior roles at Carpenter Technology and Lockheed Martin. The blue-chip group, which recently suffered a hefty writedown, further unveiled plans to separate its businesses.
Shares in FTSE 100 engineering and aerospace group, GKN, jumped 20 per cent today after it rejected a bid that values the company at £7bn. Melrose's share price has also advanced and is 6.56 percent better off at 229.10p.
"We believe Melrose would be able to substantially improve the operations and we suspect shareholders would support an increased bid", Liberum analyst Ben Bourne said in a note to clients. This represents 1.49 new Melrose shares and 81 pence in cash for each GKN share. GKN shareholders would have ended up with a 57% stake in the combined business. It was valued at £5.7 billion at the market close on Thursday, having recently suffered from problems at its aerospace division.
GKN, which used to be known as Guest, Keen and Nettlefolds and traces its history back to 1759, has struggled in recent years and its profit warning came after a downturn in its USA aerospace business.
October 13: GKN announces charges of 55 million pounds, including 15 million from the North American unit that Cummings once ran, after a review.
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 U.S. aerospace operations.
GKN confirmed its position as a major supplier of jetliner wing, tail and fuselage components with the purchase of an Airbus plant in Filton, England, in 2008. The London-based company, managed by former Wassall Plc executives, counts Gillette razors and wire-rope maker FKI Plc among its prior investments.
Melrose Industries specialises in taking over troubled or underperforming industrial groups.