By Ben Martin and Arno Schuetze
LONDON (Reuters) - Turnaround specialist Melrose (L:MRON) has fired the starting gun on a break-up of Britain's 250-year old GKN (LON:GKN) by launching a sale of the engineer's powder metallurgy business which could fetch around 1.5 billion pounds ($1.96 billion).
UK-based Melrose's banks have started to send out confidential information about the division to prospective buyers ahead of an auction process for the unit, two people with knowledge of the matter told Reuters.
The GKN business makes automotive and industrial components from powdered metal and is expected to attract interest from private equity firms.
The sale comes just five months after Melrose delisted the engineer from the London stock exchange after a drawn out and acrimonious fight with GKN's management, who resisted the turnaround group's 8 billion-pound hostile bid.
The battle drew considerable political and media attention in the UK because of fears a takeover by Melrose would bring the curtain down on GKN's long industrial heritage.
London-listed Melrose was set up 15 years ago and focuses on turning around industrial companies and then finding new owners for them, following a strategy of "buy, improve, sell".
But GKN is much older and traces its roots back more than 250 years. It made cannonballs for the Duke of Wellington's armies that fought in the Napoleonic wars of the early nineteenth century and went on to produce Spitfire fighters that took to the skies in the Second World War.
The modern GKN is made up of three main divisions: automotive, aerospace and powder metallurgy. Melrose said last month that powder metallurgy generated 254 million pounds in revenues and adjusted operating profit of 28 million pounds in the six months to the end of June.
Rothschild and Jefferies are handling the sale of the business.
A Melrose spokeswoman did not comment and referred back to the company's half-year results, when it said it was reviewing strategic options for the division.
($1 = 0.7672 pounds)