GKN PLC (LON:GKN) and Dana Incorporated (NYSE:DAN) have confirmed a US$6.1bn deal to merge their automotive businesses as the FTSE 100-listed firm continues its fight a £7bn hostile bid from Melrose PLC (LON:MRO).
In a statement, the UK said: “The board of GKN believes the proposed transaction, together with the prospects for GKN Aerospace, provides significantly greater value for GKN’s shareholders than the Melrose offer.”
Under the deal terms, GKN will receive cash proceeds of US$1.6bn, 133mln newly issued Dana shares - valued at about US$3.5bn based on its March 8 closing price - and will see the assumption of about US$1.0bn in pension liabilities in the merged business.
The UK firm’s chairman Mike Turner said. "The synergies between these two businesses and our complementary product portfolios make this a great deal for GKN shareholders."
GKN said it was still pursuing the divestment of its powder metallurgy business, and after that is complete, the group will be an aerospace-focused engineer which - the company said - will result in it being "positioned to deliver value for decades to come".
Melrose’s only response to the GKN news was to announce that its offer for the blue-chip firm is being extended and will remain open for acceptance until 1.00pm London time on 29 March 2018.
Merged firm to be based in UK, listed in New York
Dana shareholders will own 52.75% of the merged company after the closing of the Driveline deal, expected in the second half of 2018, with the firm to be based in the UK but the stock continuing to trade on the NYSE.
James Kamsickas, the US firm’s chief executive said: "This transformative and strategic transaction solidifies Dana as a world leader in vehicle drive systems and establishes a leading position in electric propulsion, which we see as the future of vehicle drivetrains:”
The NYSE-listed group said the deal is expected to enhance Dana's adjusted earnings per share in 2018 and deliver annual cost synergies of US$235mln within three years of completion.
In late afternoon trading in London, GKN shares were 2.2% higher at 430.6p each, while Melrose gained 2.3% at 221p..
In early morning trading in New York, Dana shares were 3.9% higher at US$27.22.
-- Adds Melrose news; updates share prices --