Published: Thu, March 15, 2018
Global | By Shelia Dennis

Melrose ups offer for GKN, says latest bid final

Melrose ups offer for GKN, says latest bid final

To sway shareholders, Melrose posted an improved offer March 12, increasing its bid to £8.1 billion ($11.3 billion) from its previous £7.4 billion, describing the latest bid as full and final.

In a response to the Melrose offer, GKN struck a £4.4 billion deal to merge business with the USA group Dana.

"We have recently made attempts to engage in constructive discussion with the GKN Board with a view to agreeing the terms of a recommended offer".

GKN announced the terms of the Driveline deal last week which would see Dana shareholders own 52.75% of the company and GKN the remainder, with the combined company set to be domiciled in the United Kingdom but traded on the New York Stock Exchange.

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Shares in Melrose, a UK-based industrial turnaround specialist, fell 5.1 percent to 213.2 pence, dragging down the value of the bid to 441.3 pence.

Melrose said on Monday that the deal with Dana was "ill-thought-through" and would face regulatory hurdles.

Under the new offer, GKN investors would receive 81p in cash for every GKN share they hold, plus 1.69 new Melrose shares.

Melrose also warned that private United Kingdom shareholders should also be aware that they would be liable to income tax on the value of any new Dana shares they receive and the transaction would "involve a lengthy and uncertain completion process, including anti-trust clearances in the EU, US and China, as well as Dana's shareholder approval, which is not expected until the last quarter of 2018".

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Investors have until March 29 to decide whether to take the cash-and-stock offer that would hand Melrose the task of turning around the struggling business, or stick with GKN's plan to sell off its automotive unit and focus on aerospace. Its aerospace division has also attracted a number of suitors since January, but the GKN board decided their proposals undervalued the business and did not pursue them, the company added.

GKN said in response it was evaluating the new offer.

Melrose is not the right owner of GKN.

However, in his letter, Melrose's Christopher Miller said if the Dana transaction proceeded, it would leave GKN shareholders "with a minority stake in a foreign listed group run by a Dana management team based in Ohio".

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