Dana CEO meeting GKN investors to help fight off Melrose

UPDATED: 3/13/18 1:06 pm ET - adds details

LONDON --Dana Inc. CEO James Kamsickas is in London meeting top GKN shareholders in a drive to persuade the British engineer"s investors to back a deal with Dana and reject a hostile bid by Melrose Industries.

GKN agreed to a deal valued at $6.1 billion to merge its automotive division with Dana, an Ohio-based maker of axles and driveshafts, on Friday in a transaction it hopes will help to fend off an unwanted takeover approach by Melrose, a UK-based industrial turnaround specialist.

Melrose responded to the Dana deal by raising its cash-and-shares bid for all of GKN on Monday, an offer that at the time valued the FTSE 100 engineer at 8.1 billion pounds ($11.2 billion) and which was declared "final," meaning it cannot be increased under Britain"s takeover rules. GKN quickly rejected the revised offer. 

Kamsickas is now in Britain to discuss the merits of the automotive deal with GKN"s major shareholders, two sources familiar with the matter told Reuters. A source familiar with the matter confirmed the report with Automotive News.

The Dana CEO is expected to spend most of the week in Britain meeting GKN shareholders, one of the sources added.

The battle for the future of GKN, a mainstay of Britain"s engineering sector, is reaching its final stages.

GKN shareholders have two options. They can choose Melrose"s offer of 81 pence in cash for each GKN share plus 1.69 new Melrose shares, a deal that will hand them a 60 percent stake in the London-listed turnaround specialist.

Or they can back GKN"s plan, which would see them take a 47.25 percent stake in New York-listed Dana.

GKN, led by former Ford executive Anne Stevens, has also pledged to sell off its powder metallurgy business, which along with the Dana deal would leave the engineering group focused on the aerospace sector, supplying parts for aircraft including the Eurofighter Typhoon. It would then return as much as 2.5 billion pounds to its shareholders over three years.

Such a plan "would delever GKN, but weaken its business profile," analysts at Moody’s Investor Service warned in a March 12 report. They argued that a deal with Dana would leave GKN as a "substantially smaller and less diversified" business. 

Melrose has been pursuing GKN since January, when the fight between the two companies quickly descended into a war of words.

They clashed again on Tuesday over the future of GKN"s retirement programs following an intervention by the trustees of the engineer"s pension plans.

The trustees said on Monday evening that they had held a number of discussions with Melrose about its takeover bid but had yet to receive proposals that addressed their "key concerns".

GKN said the trustees" statement showed Melrose was "not demonstrating a responsible approach to the serious issue of protecting the long-term interests of GKN’s pensioners."

Melrose"s Executive Chairman Christopher Miller retorted that the turnaround specialist is "an exemplary custodian" of pension plans.  

"We are working towards an agreement on the GKN pension (plans) which will strengthen them and better protect GKN"s pensioners," he said.

Dana ranks No. 44 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $5.83 billion in 2016. GKN ranks No. 37 on that list with sales to automakers of $6.74 billion in 2016.

Nguồn: www.autonews.com