Melrose Lowers Acceptance Level For GKN Takeover Bid

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Turnaround specialist Melrose, which has been trying to acquire GKN, meanwhile issued a separate statement, warning that following GKN's planned disposals, its Aerospace division "could be left overburdened with up to £3 billion of volatile gross pension liabilities", while shareholders will receive a minority stake in a Dana-managed business without a United Kingdom primary listing.

Under the terms of Melrose's offer, GKN shareholders would receive 81p in cash and 1.69 new Melrose shares for each GKN share they hold.

Unless they accept our offer, GKN shareholders will end up with shares in an Aerospace business overburdened with up to £3bn of pension liabilities upon the planned disposals, and a minority shareholding in a Dana-managed Driveline business without a United Kingdom primary listing, which many won't be able to hold.

Melrose further noted that following discussions with GKN's pension trustees, it had made a formal proposal to inject up to £1 billion over its ownership period, which, the turnaround specialist argues, represents nearly twice the amount of the deficit reduction package under GKN's planned disposals.

GKN's management team has presented an alternative plan to Melrose's hostile takeover offer, which would involve it merging its auto arm with USA firm Dana Incorporated, leaving GKN an aerospace-focused business.

GKN has moved to fend off the bid by concluding a deal of its own to merge its automotive business Driveline with U.S. firm Dana - allowing GKN to focus on its aerospace work. Melrose had then criticised the move, arguing that some GKN investors would not be able to hold the shares in the combined business as they would not be listed in the UK.

As an extra sweetener, the United States firm also unveiled plans to give GKN investors a slice of its dividend, saying it would pay the current quarterly dividend of $0.10 per share to the enlarged shareholder base.

This morning GKN confirmed Dana, the USA firm to which it plans to sell its automotive business, has made a decision to launch a secondary listing on the London Stock Exchange.

"By accepting the Melrose offer, GKN Shareholders will keep the potential value of all the GKN assets as majority owners of a much larger business and a management team with a clearly superior track record", said Melrose chairman, Christopher Miller.

While GKN bosses are recommending the Dana offer which would leave it as a pure aerospace-focused business, they have openly - and regularly - rebuffed advances from United Kingdom turnaround investor Melrose Industries PLC (LON:MRO).