GKN PLC (LON:GKN) has issued another warning to shareholders against voting in favour of a hostile takeover by Melrose Industries PLC (LON:MRO) as the deadline for accepting the offer looms.
Shareholders have until March 29 to decide whether to accept the turnaround specialist’s £8.1bn offer or back GKN's plan to sell its automotive division to Dana Inc (NYSE:DAN).
In a statement on Wednesday, GKN said it wanted to make sure shareholders were not influenced by “misleading statements” made by Melrose as part of its “highly opportunistic offer”.
Under the terms of the engineer's US$6.1bn deal to merge GKN Driveline with Dana, GKN shareholders will receive 47.25% of the merged business.
Dana merger 'highly complementary', says GKN
Melrose has claimed that the deal is “hasty and ill-thought through” but GKN insisted that it has considered a merger with Dana for a number of years.
“The combination brings together two highly complementary businesses creating a global leader in light vehicle drivetrain systems and one of the largest powertrain suppliers worldwide,” the engineer said.
GKN also took another swipe at Melrose’s claim that the engineer’s plan would leave shareholders nursing up to £3bn of pension liabilities.
READ: GKN slams 'misleading' claims by Melrose about its pension liabilties as takeover battle rages on
The engineer has agreed to contribute £625mln into its UK pension schemes and Dana will put in a further £124mln, implying a total contribution of £749mln.
GKN has also promised to halve its pension liabilities, eliminate its pension deficit and “substantially reduce” the future volatility of remaining schemes.
In comparison, Melrose has said it would invest £1bn into GKN’s pension fund.
GKN said it is “remarkable” that 11 weeks since the start of Melrose’s hostile takeover approach it is yet to reach an agreement with the trustees of its pension schemes.
GKN says Melrose is the 'high-risk choice'
"Our shareholders have an important choice to make, and we believe an independent GKN is the right choice,” said GKN chief executive Anne Stevens,
“We are confident our new strategy will maximise the value of GKN and we are working with urgency to deliver it.
She added: “Melrose lacks the knowledge and experience to manage GKN successfully and has absolutely no plan for the business. Melrose is the high-risk choice. Melrose's offer does not come close to reflecting GKN's true value and I urge shareholders to reject it."