- Dana’s increased offer brings the total cash consideration to $1.77bn (£1.28bn)
- GKN also retracted some statements of shareholder support in respect of GKN
US car parts firm Dana has increased its cash offer for GKN’s automotive business by $140million (£100million) as shareholders prepare to cast their votes on the controversial Melrose takeover bid this week.
The offer, which seeks to persuade GKN shareholders to back Dana’s deal instead of Melrose’s, brings the total cash consideration to $1.77billion (£1.28billion).
It comes as GKN separately issued an unusual stock market statement retracting some statements by its chief executive and finance director to the Sunday press suggesting that shareholders supported their opposition to the Melrose bid.
It comes just days before investors cast their ballots on the Melrose deal (PA)
The engineering group said that such statements of shareholder support in respect of GKN were ‘not verified and are hereby retracted’.
Shares in GKN were trading 0.6 per cent higher at 431.5p.
Shareholders have until Thursday this week to either choose Melrose’s offer for the whole company, or back a plan from GKN’s management to revive the business’s fortunes by selling two divisions – including the automotive business to America’s Dana – shifting the focus onto aerospace parts.
Dana’s upped bid also includes doubling the size of its share repurchase programme to $200million (£145million), helping sweeten the overall deal which was previously valued at around £4.5billion.
GKN welcomed the announcement, which will see its shareholders own more than 47 per cent of the combined company that is set to be listed on both the New York Stock Exchange and London Stock Exchange.
It said £700million would be returned to shareholders ‘as soon as practicable’ after the deal is completed.
GKN chairman Mike Turner said: ‘This transaction, which along with Project Boost was initiated prior to the Melrose bid, offers by far the best strategic route forward for GKN Driveline.
‘The challenges and opportunities of electrification mean that consolidation is required. By moving now, the Dana-GKN Driveline combination will be strongly positioned to be a global leader in this field.’
He added: ‘We believe that Melrose would find it extremely difficult to create equivalent value in the future from GKN Driveline if its offer were to be successful.’
GKN has doggedly rejected Melrose’s advances, with chief executive Anne Stevens describing Melrose’s takeover as ‘high-risk’ and the offer not coming close to reflecting true value.
Numis analyst David Larkam said that while the Driveline deal has strategic merits, it is being sold ‘too cheaply and too early’.
‘We see the combination of Dana and GKN Driveline as making industrial and commercial sense as scale benefits increase. Synergy benefits also help to support a transaction.
‘Both have electric vehicle capabilities, although we believe GKN is more advanced, as highlighted by current auto programmes,’ Larkam said.