GKN plots a £4.4billion sell-off to defeat bid by City predators

ENGINEERING giant GKN is planning to sell half its business to a US ally to fend off a hostile takeover bid and protect its key defence division.

The British car and aeroplane parts maker has agreed to sell its automotive division to Dana for £4.4billion, creating the world’s biggest provider of driveshaft products for cars and trucks.

Dana is a long-time ally of GKN, and the two firms have run many projects together. The combined company, which will have sales of more than £9billion, will be listed on the New York stock exchange but based in the UK.

Bosses believe the tie-up would better protect jobs and pensions than a £7.4billion hostile takeover tabled for the whole firm by City predators Melrose. It would also keep GKN’s pioneering aerospace division, which holds major contracts with the Pentagon, as one company.

Financial experts welcomed the white knight deal which it is hoped will help protect the aerospace division. It employs about 3,500 in the UK making parts for key programmes such as the Eurofighter Typhoon.

‘There is a history of a relationship between GKN and Dana, and it has been a good one,’ said industry analyst Howard Wheeldon. ‘It’s the right way for the company to go – I think it changes the dynamic of what’s been going on. I hope that GKN will be allowed to get on with what it needs to do and GKN shareholders will back it.’

The deal was agreed by the trustees of GKN’s heavily indebted pension fund.

It will see about half the deficit taken on by Dana while GKN plans to pay the rest down to nothing. Shareholders now have to choose between Melrose’s offer or the tie-up with Dana, which GKN believes will leave them much better off.

Liberal Democrat leader Sir Vince Cable said: ‘Whichever transaction goes ahead the important thing for the UK is that the research and development capability and the investment should not be compromised.’

Britain’s largest union, Unite, called for assurances on jobs and investment.

But Christopher Miller of Melrose last night claimed the ‘hasty sale’ would be bad for shareholders.