GKN Driveline production worker

Rival Suitors for GKN Offer Incentives to Win Investor Support

March 19, 2018
The measures are aimed at shoring up weaknesses in the dueling proposals that will determine GKN’s future.

GKN Plc’s rival suitors offered additional sweeteners to win over the U.K. aerospace supplier’s shareholders, who are set to decide next week which side to support.

Dana Inc. pledged to trade its stock in London following the U.S. company’s planned takeover of GKN’s automotive unit, it said Monday in a statement. Melrose said separately that it would bolster GKN’s pension plan, while easing acceptance terms for its hostile bid to 50% plus one share from its original 90% target.

The measures are aimed at shoring up weaknesses in the dueling proposals that will determine GKN’s future. Management of the Redditch, England-based company opposes the 8.1 billion-pound (US$11.3 billion) offer from investment firm Melrose, arguing that investors have more to gain if they stick with management’s turnaround plan. As part of its defense, GKN set in motion plans for a breakup, agreeing earlier this month to sell its automotive unit to Dana in a $6.1 billion transaction.

GKN advanced 1% to 430.60 pence at 8:29 a.m. in London, below the stated value of a sweetened 467-pence offer it rejected from Melrose last week. GKN has said its plan would generate more than 500 pence a share for investors. Melrose declined 1.2%.

Dana, which will rename itself Dana Plc following a combination with the automotive business, said it planned the secondary U.K. listing following talks with GKN shareholders.

A London listing will offer shareholders “an opportunity to share in the success of the new company, including value created through the delivery of $235 million in annual synergies,” Jonathan Collins, chief financial officer of Maumee, Ohio-based Dana, said in the statement.

Melrose said Monday that it’s proposing an injection of as much as 1 billion pounds into GKN’s pension program and reiterated that its bid is “clearly superior to the hasty breakup” that the U.K. auto and aerospace components maker is planning. The deadline for shareholders to accept its bid is March 29.

By Tom Lavell

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