ArvinMeritor Launches Hostile Takeover Bid For Dana

ByJill Jusko Fierce competition among automotive parts suppliers heated up on July 8 as ArvinMeritor Inc. announced plans to acquire fellow automotive supplier Dana Corp. Troy, Mich.-based ArvinMeritor said it will shortly commence a tender offer of $15 per share to obtain all outstanding shares of Dana Corp. for a total equity value of $2.2 billion and the assumption of net debt and minority interests equivalent to about $2.2 billion. ArvinMeritor says it is being forced to appeal directly to Dana's shareholders after the board of directors of the Toledo, Ohio-based manufacturer repeatedly refused to meet with ArvinMeritor to discuss the proposal. ArvinMeritor says it first broached its desire to acquire the larger Dana on June 4, when it spoke with Dana Chairman and CEO Joseph Magliochetti. "We would prefer to meet with the Dana board and its advisors to discuss our all-cash offer and negotiate a mutually acceptable transaction; however, Dana has rejected our prior proposals and refused our requests to enter into discussions," said Larry Yost, chair and CEO of ArvinMeritor. "Therefore, we believe it is necessary to take our offer directly to Dana's shareowners." ArvinMeritor also announced that it has filed a lawsuit against Dana and it board, alleging that Dana's board breached its fiduciary duty to shareholders by rejecting the company's proposals without a meeting. In a statement issued in response to ArvinMeritor's announcement, Dana said its board of directors would evaluate the offer once it is tendered and advise shareholders of its position within 10 days. ArvinMeritor said its desire to acquire Dana is a result of the fiercely competitive automotive market. Combining the two firms, it said, would "create great value." In a Webcast on July 8, ArvinMeritor's Yost noted that his company's $15 per share offering was a 56% premium above Dana's closing price on June 3, the day before a proposal was first directed at Dana, and a 25% premium over Dana's closing stock price on July 7, the final trading day before the public announcement. The offer is conditional upon, among other things, the removal of Dana's poison pill and obtaining the necessary regulatory approvals. During the Webcast Yost skirted questions raised about possible antitrust issues presented by combining the two companies, saying only that "we anticipate getting all regulatory approvals necessary."