£100m Dana sweetener for GKN shareholders
GKN has pledged a quick payout to shareholders from a merger of its automotive business with Dana as the US group sweetened its offer.
The FTSE 100 engineer, seeking to fend off a near-£8billion hostile takeover by Melrose Industries, said it would return up to £700million “as soon as practicable” after the deal, part of a plan to return up to £2.5billion over three years.
Dana has increased the cash element of its offer by £100million, or 8.6 per cent, to £1.28billion. GKN shareholders will continue to own 47.25 per cent of the combined company, which will be listed in London as well as New York.
The combination is expected to deliver annual savings of $235million by the end of the third year after the deal completes.
The battle for control of GKN is finely balanced ahead of Thursday’s deadline for investors to give their verdict.
GKN has promised to deliver improvements to its aerospace business, while Melrose points to its track record in turning around underperforming businesses. GKN shareholders would own 60 per cent of a combination with Melrose.
GKN chairman Mike Turner said: “By moving now, the Dana-GKN Driveline combination will be strongly positioned to be a global leader. What was already an excellent deal for both parties has just become an even better one for our shareholders.
“We believe Melrose would find it extremely difficult to create equivalent value in the future from GKN Driveline if its offer were to be successful.”
Melrose argued that GKN had “a history of missed margin targets, recent profit warnings and a panicked defence strategy”. Its chairman, Christopher Miller, said: “The GKN board’s lack of confidence in its own abilities to run the business is a clear indication that it’s time for a change.
“We urge shareholders to cast their votes for a proven Melrose team.
“The alternative is the reckless dismemberment of a business and needless value destruction for all shareholders.”