Melrose said its third and final offer values GKN at 467p per share, representing an "attractive premium" of 43% to the closing price of 326.3p per share on 5 January, the last business day before its initial approach.
Under the proposal, GKN shareholders would own 60% of Melrose and receive £1.4bn in cash. The previous offer gave GKN shareholders 57% of Melrose.
Melrose, which first approached GKN with a 405p per share bid, said it continues to believe it has the “right team to deliver the fundamental cultural change that GKN so desperately needs”.
“We have a clear plan; GKN does not,” said Melrose chairman Christopher Miller, throwing shade at the engineer’s strategic plan.
GKN’s so-called Project Boost strategy under new chief executive Anne Stevens will see it become an aerospace-focused engineer through the divestment of non-core units, including Power Metallurgy. It plans to return up to £2.5bn in cash to shareholders over the next three years through its disposals.
On Friday, the company also confirmed a US$6.1bn deal to merge its automotive arm with Dana Incorporated (NYSE:DAN).
READ: GKN and Dana confirm US$6.1bn deal to merge automotive businesses, with new firm to be based in UK, listed in New York
“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,” GKN said when it announced the deal on Friday.
Responding to Melrose’s new offer, GKN said it it is currently evaluating the terms of the revised bid.
"Shareholders are advised not to sign any document which Melrose or its advisers send to them," it said. "GKN directors will do the same in respect of their own beneficial shareholdings."
In a separate release, GKN also issued its latest defence against Melrose's previous offer. GKN said that offer was "opportunistic" and "fundamentally undervalues" its prospects.
Melrose says it will unlock GKN's full potential
Melrose said GKN's proposed merger with Dana will see the US engineer take on a significant proportion of its pension liabilities, a key concern raised in the Melrose deal.
“The potential transaction with Dana, if it is allowed to go ahead in the last quarter of this year, would leave you with a minority stake in a foreign listed group run by a Dana management team based in Ohio,” said Miller.
He added: “The outcome of the disposals would leave behind a GKN aerospace business burdened by a disproportionate, and very substantial, amount of gross pension liabilities, inappropriate for the size of the underlying business.”
Miller told GKN shareholders that Melrose has “decades of experience in successfully transforming businesses” that mean it is best choice to re-focus the business and unlock its full potential.