EXTRA: Melrose Hits Back At GKN's Dana Deal With Sweetened Offer (ALLISS)

The stand-off continues

The stand-off continues

British engineering group GKN on Monday rejected an improved and final takeover bid, worth £8.1 billion, from turnaround specialist Melrose Industries.

Melrose said in a letter from its chairman that GKN shareholders can join it on a 'journey of value creation by investing in a United Kingdom listed manufacturing powerhouse worth over £10 billion today and receiving £1.4 billion of cash'.

In a letter to GKN shareholders, Melrose chairman Christopher Miller criticised its takeover target's management team for refusing to hold discussions over the offer and slammed recent moves by GKN to sell its Driveline business.

GKN said in its latest defense, also published on Monday, that shareholders would be invested in a more profitable GKN Aerospace following the sale of Driveline and powder metallurgy, plus have holdings in the merged GKN-Dana company.

The new offer proposed that GKN shareholders own 60 percent of Melrose and receive £1.4 billion in cash.

"The board of GKN is now evaluating the revised offer".

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But Melrose declared its sweetened offer as "final", meaning it can not improve the terms further under British takeover rules.

The deadline for accepting the offer is 1pm on Thursday, March 29. "Your board has unequivocally declined each time to enter into any such discussions". It also forces GKN shareholders to accept shares in a USA firm which many would not be able to hold, and they also would have to pay tax on those Dana shares. However, Melrose argued that many GKN investors would neither wish nor be able to hold USA stock.

Well, more than you might think, from the share price reaction: GKN shares down 2.5 per per cent to 424¼p, Melrose down 5 per cent to 213½p.

"The deal signed with Dana means that over two thirds of the group's gross pension liabilities, including approximately 85% of the gross United Kingdom pension liabilities, will remain with the GKN group following the sale even though less than half of the profits of the group are retained", Miller said.

GKN's chairman, Mike Turner, wrote to investors on Monday to point out that Melrose "lacks experience in several critical areas and that its priorities are inappropriate for running a global technology-based business like GKN".

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